July 23, 2025 • 22 mins
Watch Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Isabelle Lee
-John Butler, Bloomberg Intelligence Senior Telecom Analyst, discusses AT&T earnings. AT&T reported second-quarter results that mostly exceeded Wall Street estimates, including faster-than-expected growth in wireless phone subscribers.
- Lindsay Dutch, Bloomberg Intelligence Consumer Hardlines Senior Analyst, discusses Hasbro earnings. Hasbro is raising its full-year outlook after a record quarter for its Magic: The Gathering card game. Second-quarter revenue was $980.8 million, beating analysts’ estimates of $880.5 million, and adjusted earnings per share were $1.30, beating projections for 77 cents.
- Jody Lurie, Bloomberg Intelligence Credit Analyst, discusses Hilton earnings. Hilton Worldwide Holdings Inc. lowered expectations for net income for 2025 as demand for US hotel bookings declined in the second quarter. US travel demand has faced headwinds in recent months, including lower consumer confidence and a decline in international visitors.
-Anurag Rana, Bloomberg Intelligence Technology Analyst, discusses the latest on the Microsoft hack. The number of companies and organizations compromised by a security vulnerability in Microsoft Corp.'s SharePoint servers is increasing rapidly, with the tally of victims soaring more than six-fold in a few days, according to Eye Security.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Applecarplay and Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 2 (00:23):
AT and T reported some numbers. There are some pretty
big numbers and subscribers. I noted stock's kind of flat today,
but it's up twenty percent year to date. Let's break
it down with John Butler, Bloomberg Intelligence senior telecom analyst
and the pride of Lafayette College. Out there. John, talk
to us about AT and T. That's a competitive business
there in What did they deliver?
Speaker 3 (00:43):
Boy, it is a tough business, Paul, and I'll tell
you what. As quarters go for AT and T, I
would say it was a relatively unremarkable quarter. And in
telecom that's a very good thing. I mean, I seem
to just say a quarter and in quarter app AT
at T is the steady hand in the space here.
Speaker 4 (01:02):
I mean, they just.
Speaker 3 (01:03):
Have done a great job of setting a foundation for
a very good business and just executing on that plan.
They do a quarter in quarter out and two Q
was no exception here.
Speaker 5 (01:16):
What are you expecting, Like, how are AT and T
and specific metrics like hash floor and net ads really
playing out compared to its competitors in this space. I
feel like the network space is really very challenging because,
as Paul and I talked about, it's so easy to move,
especially these days when you can keep your cell phone number.
Speaker 3 (01:35):
Yeah, I mean, what you're talking about is switching activity.
And if there was anything this quarter that sort of
caught my eye, it was the churn number. And by
the way, I wasn't alone. I mean, there were tons
of questions on the call from analysts about churn and
for our listeners, churn is a measure of, on a
net basis, what percent of people left the brand during
(01:59):
the core and AT and T. For AT and T
it was point eighty seven percent. A year ago it
was point seven percent. So we saw this seventeen basis
point increase, which to me is not incredibly remarkable. It's
not alarming per se, but it could be sort of
(02:19):
a hint that the subscriber acquisition and retention costs are
going to go up a little bit, and that could
put a squeeze on the margin and as you said, Isabelle,
there's just this very competitive market out there. The cable
operators are really leaning into these low priced plans, and
(02:40):
it's just making life that much tougher for AT and
T Verizon and T Mobile. Again, though, I go back
to the fact that AT and T just is a
steady performer here. They have a great device promotion out there.
They continue to rely on that to drive subscriber growth,
and a continues to work for them.
Speaker 2 (03:01):
Hey, John, I know that the Verizon another stock that
you cover. On their call, they used, I guess, the
opportunity for President Trump's tax and spending bill to boost
some of their full your guidance metrics. ATT did not
do that, did they.
Speaker 3 (03:17):
No, they're actually this is interesting, Paul. They're taking all
the savings and they're driving it back into upgrading the
five G network, which they've been doing. It's nothing that
they've been ignoring it by a long shot, but they
are trailing Verizon and T Mobile just a bit in
the deployment of what's called midband spectrum, which is very
(03:39):
high capacity. So you know, the download speeds on your
phone are dictated by how much spectrum is deployed in
the network, and they're going to take those savings and
just lean hard into deploying more spectrum on a nationwide
basis to get network speeds and network coverage up.
Speaker 5 (04:00):
Is broadbandsila growth driver for AT and T or are
there signs of a slowdown?
Speaker 4 (04:07):
You know, it's a great question.
Speaker 3 (04:08):
So the other I guess word on this report in
my eyes was the fact that they just missed analyst
expectations for fiber net additions, the net new subscriber additions
that they had during the quarter in their fiber broadband business.
Having said that, they continued to quarter and in quarter
(04:30):
app deliver very stable results there. So I think the
fiber broadband business is healthy. It's actually healthier in many
ways than the mobility business, which is hyper competitive. But
to me, AT and T out of all the big
three is doing a great job just laying that foundation
(04:52):
for future growth by continuing to roll out new coverage
areas for fibers, I think they've done a great job.
There is sort of the summary statement that i'd make.
I'm broadband all right, John, thank you so much for
joining us.
Speaker 2 (05:08):
Appreciate it as always John Butler, he's a senior telecom
analyst for Bloomberg Intelligence.
Speaker 1 (05:14):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business App. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (05:28):
Paul Sweeney live here with you in the Bloomberg Interactive
Broker Studio. Streaming live on YouTube here, Ray Smack. In
the middle of earning season, let's talk toys. That sounds
kind of fun. Hasbro reported numbers. It looks solid to me.
They beat, they raise their guidance, get the stocks down
three percent. I just don't get this whole stock thing.
Lindsay Dutch, she's the pro. She understands what's going on here.
She's a consumer hardlines analyst at Bloomberg Intelligence. Lindsay talked
(05:51):
to us about what we learned from Hasbro and the
toy market.
Speaker 6 (05:56):
Yeah, hi, Paul, Hi aswell. Thanks for having me so yes, Paul,
just as you said, you know, strong quarter a really
a continuation from the first quarter, where all the strength
is really coming from Magic the Gathering, Monopoly Go and
Hasbro's digital gaming business. What we did not learn from
the release is really about the consumer and what the
(06:17):
outlook is for toys in the second half, and that's
causing a lot of uncertainty. You know what that back
half might look at look like I was.
Speaker 5 (06:26):
Going to ask how exposed is haspro to current consumers
spending trends, Like, especially in the toys and entertainment area,
do we see more middle income shoppers buying haspur or
what kind of consumers are you seeing?
Speaker 6 (06:38):
Yeah, so the toy business typically grows with GDP. It
has been you know, coming down a bit challenge over
the past couple of years. After the peak during COVID
when everyone was stuck at home buying a lot of toys.
This year was supposed to be a turnaround year for
toys and then early this year, you know, we got
hit with the tariff news, which created a lot of
(06:58):
uncertainty in the business. One is, you know, we don't
know how the consumer is going to react to broader
price increases, and we do expect increases on toys very specifically,
so companies like Hasbro and Mattel, you know, some of
the biggest toy makers in the globe, you know, are
really faced with that challenge in second quarter. Normally retailers
(07:22):
already start buying their holiday inventory. That didn't happen this year.
Those retailers, Walmart, Target, took a pause. So normally by
now we would sort of get a sense of holiday
But because of that pullback, you know, Hasbro saw their
consumer products segment see a sixteen percent decline in the
second quarter revenue because of that hold on those orders.
Speaker 2 (07:43):
I would have thought they would have tried to front
run the tariffs. Here, what's the company saying about when
they expect some of these retailers to place their orders.
Speaker 6 (07:52):
So they expect the orders to be sort of made
up in the third quarter. And the challenge with that is,
you know, some of those hotter toys that do sell
out maybe in the early holiday shopping season, there will
be very little time to sort of replenish on that end.
So Hasbro did continue their production, which you know they
do still make about fifty percent of their toy products
(08:13):
in China. They continued in May. You know, they took
some of that inventory on their books in the second quarter.
That's why we saw the inventory come up there. You know,
they're hoping that the retailers, you know, place more of
their orders in the third quarter, you know, ahead of holiday.
You know, the risk is they just don't really know
what those pre order will be and there will be
limited time for additional orders like in that fourth quarter
(08:38):
right before holiday.
Speaker 5 (08:40):
To your point. In April, the company warned the Times
CLID impact profits by as much as sixty million two
hundred and eighty million this year, and they did reduce
their Chinese manufacturing output to less than forty percent, or
at least plan to by twenty twenty six. If they
do that, will they pass on the cost to consumers?
And do you think consumers will bear the brunt of
that burden.
Speaker 6 (09:00):
Yes, so Hasbro is using multiple mitigation strategies. You know,
they have been very focused on cutting costs. You know,
prior to tariffs, they sort of accelerated some cost cutting
at the corporate level. They will be raising prices, I
think selectively on toys. They are also just going to
not sell certain toys in the US if it can't
(09:23):
it doesn't make financial sense to do so if they
can't raise the price and consumers would not buy it
at that price.
Speaker 5 (09:31):
So they're sort of.
Speaker 6 (09:31):
Using a mixed strategy. They had predicted tariffs to cost
sixty million to one eighty million on an annual basis.
Three months ago, they sort of dropped that impact closer
to the sixty million side. That's because of the lower
rate on the Chinese imports. They are working to diversify
the supply chain, but that will take time. The goal
(09:53):
of less than forty percent that's really by twenty twenty seven.
So in terms of this year, you know where their
supply chain is. They're sort locked in with that at
the moment, and they kind of have to work with
the price increases and sort of balancing where do I
increase price and not hurt the demand even more?
Speaker 2 (10:10):
All Right, Lindsay, thank you so much. We appreciate your analysis,
Sir Lindsay Dutch. She's a consumer hardlines senior retail analyst
for Bloomberg Intelligence space down there in our Princeton, New
Jersey campus, talk just about Hasbro, the toymaker. Had some
really good numbers and some good guidance, but there's still
tariff concerns out there surrounding this industry as well as others.
Stock trading off a little bit.
Speaker 1 (10:33):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple cocklay and Android
auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (10:47):
Right in the middle of earnings here today we saw Hilton,
the hotel company, I reported numbers and they lowered expectations
for net income and saying that demand for US hotel
bookings declined in the second quarter. Let's get the break
at that a little bit more detail, because boy, I
get on a plane, it just seems like it's packed,
and I assume those people are staying at hotels and everything.
Let's check in with Jody Lori, senior credit analyst for
(11:09):
Bloomberg Intelligence. She covers all the fun stuff, the gaming business,
the hotel business, the casino, the cruise is all that
good stuff. So she has a great view on the
consumer and kind of what's happening out there in that
part of the economy. Jody, what did you learn from
Hilton here? What are they saying about their business?
Speaker 7 (11:28):
So, Paul, I mean, I think what's so interesting is
they definitely tried to provide an upbeat, optimistic view. The
amount of times that they talked about the thawing that
after the freeze from tariffs was sort of interesting to hear,
and I mean, I think it fits a little bit
with the conversation that we've been having with clients is
that what we've been seeing in our data is twenty
twenty five summer should still be pretty strong, but I
(11:51):
think as we get into the latter part of the
year and then into next year, it's a little bit uncertain.
And I think they were trying to that economic data
is positive for them and will provide for additional sort
of demand, but it's still a little bit you know,
it's still a little bit hazy, at least for me,
(12:13):
and I mean more than anything, you know, they're so
focused on giving back to shareholders that and.
Speaker 2 (12:18):
There's a credit analyst that's not something you necessarily.
Speaker 7 (12:21):
Yeah, yeah, you know, Hilton's one of those companies that
we say, if they wanted to be investment grade, they
probably could work to it yesterday and would have been
investment grade five years ago. But you know, from a
margin standpoint, they're so much stronger than a lot of
their peers. But from a leverage standpoint, they just they're
happy being around three times three and a half times,
and they've indicated that they want to be a little
(12:42):
bit higher than where they currently are, So I mean,
I think they're going to invest in organic growth and
look at ways to sort of grow some of their
newer brands like Spark, which they've been talking about. And
the most interesting thing related to that is it seems
like they're looking outside the US for growth opportunities. And
maybe that's a function of the fact that while they
think the US is still having decent momentum, perhaps they
(13:05):
need to sort of look outside to sort of really
see the growth.
Speaker 5 (13:09):
Where are they finding that growth elsewhere? And is that
in relation to just the lower consumer confidence in the
US and the decline of international travelers. So then they
just decided maybe looking elsewhere US better. What was the
rationale behind that?
Speaker 7 (13:22):
So they actually talked about on the first quarter, they
talked about Canada and Mexico demand, and they said specifically
that it's such a small percentage, just like one percent
of their total revenues is Canada and Mexico, and inbound
US is certainly a large portion, I think, larger than
they sort of indicate. But I think they're also sort
of saying, Okay, yeah, it's going to be an effect,
(13:43):
but it's not that much effect. I think they are seeing.
And what we sort of heard on this most recent
call is that there is an element of trickle down
effect related to what's going on in the US, the
prevalence of travelers coming into the US VERSUS historically because
of the tariff and geopolitical environment, and so, you know,
(14:05):
they mentioned Saudi Arabia, they mentioned India, they mentioned turkeya
on the call, and I think they're looking at anywhere
there's potential growth opportunities. I mean, Hilton's so large and
global that it's not really surprising to me, but it
is sort of interesting when you hear a company that's
seventy five percent US dominant that they are sort of
looking to expand elsewhere.
Speaker 2 (14:26):
Hey, Trinty, we're hearing from you know, a number of
companies that depend upon travel that maybe international travel inbound
to the US is less than than it maybe in
past periods, maybe in part because of all this tariff discussion,
people deciding not to spend their travel dollars in the US.
What's Hilton say about that?
Speaker 7 (14:47):
So, Hilton didn't so much talk about it on this call,
per se, but they danced around it a little bit,
saying that they think that you know that with the
tariff situation sort of it hasn't resolved itself by any measure,
but with us getting over that shock of Liberation Day,
that they're now seeing that demand is picking up. They're saying,
(15:09):
you know, business conference travel, and so I mean, I
think they're sort of dancing around it. But if we recall,
I mean a lot of the companies in my space
still having gone back to pre COVID levels when it
comes to inbound US. I mean, we like to talk
about United Parks, which is formerly SeaWorld, because they talk
about it in their Florida Parks that they still haven't
seen the return of international travelers to pre COVID levels.
(15:32):
And so you add on top of that the tariff
effect in the geopolitical environment, you say, okay, if we
weren't back to pre COVID levels, and then you have
this component to it, I don't know if we'll get
back to pre COVID levels sometime soon.
Speaker 2 (15:45):
Jody, thanks so much. I always appreciate checking in with you.
Jody Lourie, she's a senior credit analyst for Bloomberg Intelligence,
talking to us a little bit about the Hilton numbers. Again,
the company took down a little bit of guidance and
maybe citing some of the uncertainty surrounding the tariffs they
cited as well as reduced. They also call that reduced
government travel. So maybe the whole doge thing people with
(16:05):
some of the government employees are maybe traveling aple I
hadn't thought about that.
Speaker 5 (16:08):
Business are also reducing travel, Like I mean, I don't
want to single out Bloomberg, but everyone like you only
really travel when it's mandatory. If you can do zoom,
you should do zoom. So we see it really.
Speaker 2 (16:18):
But off to account that not our salesforce. Our salesforces
out there all the time pressing the flesh with Bloomberg customers,
and that's a good thing. That's how it's done.
Speaker 1 (16:29):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarclay and Android Auto
with the Bloomberg Business App. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (16:43):
Switch gears to Technology Here we check in with Anaagrana,
Senior Tech Out also Bloomberg Intelligence, Honra. A lot of
news is going to be coming our way from your
tech space starting tonight after the clothes, we'll have Google Tesla,
then all the other tech names will be coming out
as well. I want to start with mike Soft. Can
you give us a summary or update of what's happening
(17:03):
with this software cyber breach here doesn't seem to be
impacting the stock that much. What's Microsoft saying? If anything?
Speaker 8 (17:13):
I think the news is out and frankly, you know,
apart from the one big breach last year where crowds
tried really got hurt, these breaches typically don't have that
big un an impact on the stock, frankly because you know,
it's a small portion of the one particular application, and
you know, I think the news story is far bigger
than what it has an impact on the stock. In fact,
(17:34):
if anything, people will be more inclined to buy Microsoft
security products to protect themselves down the road. They would
be more inclined to move more workloads to the cloud
to make sure that the you know, the online version
of the software was not impacted. So if you know,
it just sells by itself, some of the security products,
and these beaches obviously not a good headline for the company,
(17:54):
but you know, these things do happen quite a bit.
Speaker 5 (17:57):
How is the cloud business looking like these days, I
feel like it's one of the main drivers that growth
through many companies, from Amazon to Microsoft. As we're talking
about to most of the big tech giants. Is it
competition becoming more fierce than is there a leader emerging
in this space?
Speaker 8 (18:11):
See, the leader was always Aws, But frankly speaking, over
the last two years, Microsoft has really narrowed the gap
because of its open Ai relationship.
Speaker 4 (18:19):
They're the only company who's really.
Speaker 8 (18:21):
Seeing the biggest benefit of you know, all the searchers
we're doing in chag GPT because open Ai runs primarily
on Microsoft's cloud network. So when they report next week,
we are expecting a big number coming out of that
AI contribution. So Microsoft, I think, is the bigger beneficiary
right now amongst all the big, bigger vendors.
Speaker 2 (18:41):
So you know, it's interesting is it worth investors ranking
kind of who are the big cloud players, who are
the big AI players? Is it worth it? Or is
it better just to say, you know, AI is going
to kind of be all over the tech stack, and
I just got to be long tech. How do you
think about really getting quality exposed to that theme?
Speaker 8 (19:02):
Yeah, when you look at cloud, I think all of
the top four vendors will flourish and flourish well. When
that would be Aws, Microsoft, Google, and then Oracle after that,
so all four will make a lot of money.
Speaker 4 (19:14):
Then you want to dissect each one of them.
Speaker 8 (19:16):
Within this group, Microsoft is the one that's seeing the
current direct benefit.
Speaker 4 (19:21):
And that's because of open Ai. The other two, whether.
Speaker 8 (19:24):
It's Amazon or Google, will start to see more and
more revenue flow in because of the applications people are
building on their cloud platform. And then lastly on the
Oracle side, they are benefiting in another part of cloud,
which is more on the infrastructure side where they're getting
a lot of money or you know, future funding from
open Ai to create their data centers to help train
(19:45):
the bottle. So each one is slightly different, but I
would say as as you mentioned, the total basket you
know should do well over time.
Speaker 5 (19:52):
You cover tech and next week is a big week
for those companies and beyond tech. Be am author expected
to deliver nearly fifteen percent of profit growth and robust
demand for AI and that's compared to the virtually no
growth for the rest of the four hundred and nine
or three stocks. Are you watching anything any specific company
you're excited about and you mentioned you're looking at cloud,
but is there anything else that is factoring in your outlook?
Speaker 4 (20:15):
So there can be two elements of it.
Speaker 8 (20:17):
One is the cloud, the AI side of spending, and
the non AI side of spending. What we saw from
SAP yesterday and Inphasis this morning, and then you know,
taught at a couple of weeks ago, so that the
non AI tech spending is under pressure. People are not
spending as much because they are not sure how the
tariff related uncertainty is is playing out, so they're seeing
(20:39):
a delay in closing, closing of deals.
Speaker 4 (20:42):
And everything around it.
Speaker 8 (20:43):
But on the AI side, we anticipate strong results from Microsoft,
for example. So that's there the two dichotomy over there
between the two vendors. The third thing that we are
watching is actually what happens on the margin side of
things because a lot of these companies are investing very
heavily in AI. Because of that, the margins are going
to get squeezed. And for that, what we think is
(21:04):
going to happen is they're going to take reduction in force,
either through not hiding at the same pace that they
have been or basically laying off a portion of their
workforce in order to counter some of that pressure. So
those are the three theams that we are most interested
in right now.
Speaker 2 (21:19):
An Agrana absolutely, thank you, appreciate on Agrana Tech Analysts
Bloomberg Intelligence Agrana Mandeep Sing. Those are our two senior
tech analysts. They manage our global technology research effort for
Bloomberg Intelligence. We have close to I think twenty analysts
covering technology on a global basis, a lot based in Asia,
based in the US, and based in Europe. And that's
(21:40):
the way you have to cover it, folks. Tech is
an all compassing sector. It's the biggest part of the
SMP five hundred and you have to have the complete coverage,
and we do on a global basis, I think the
best tech research on the street with the best data.
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Speaker 2 (00:23):
AT and T reported some numbers. There are some pretty
big numbers and subscribers. I noted stock's kind of flat today,
but it's up twenty percent year to date. Let's break
it down with John Butler, Bloomberg Intelligence senior telecom analyst
and the pride of Lafayette College. Out there. John, talk
to us about AT and T. That's a competitive business
there in What did they deliver?
Speaker 3 (00:43):
Boy, it is a tough business, Paul, and I'll tell
you what. As quarters go for AT and T, I
would say it was a relatively unremarkable quarter. And in
telecom that's a very good thing. I mean, I seem
to just say a quarter and in quarter app AT
at T is the steady hand in the space here.
Speaker 4 (01:02):
I mean, they just.
Speaker 3 (01:03):
Have done a great job of setting a foundation for
a very good business and just executing on that plan.
They do a quarter in quarter out and two Q
was no exception here.
Speaker 5 (01:16):
What are you expecting, Like, how are AT and T
and specific metrics like hash floor and net ads really
playing out compared to its competitors in this space. I
feel like the network space is really very challenging because,
as Paul and I talked about, it's so easy to move,
especially these days when you can keep your cell phone number.
Speaker 3 (01:35):
Yeah, I mean, what you're talking about is switching activity.
And if there was anything this quarter that sort of
caught my eye, it was the churn number. And by
the way, I wasn't alone. I mean, there were tons
of questions on the call from analysts about churn and
for our listeners, churn is a measure of, on a
net basis, what percent of people left the brand during
(01:59):
the core and AT and T. For AT and T
it was point eighty seven percent. A year ago it
was point seven percent. So we saw this seventeen basis
point increase, which to me is not incredibly remarkable. It's
not alarming per se, but it could be sort of
(02:19):
a hint that the subscriber acquisition and retention costs are
going to go up a little bit, and that could
put a squeeze on the margin and as you said, Isabelle,
there's just this very competitive market out there. The cable
operators are really leaning into these low priced plans, and
(02:40):
it's just making life that much tougher for AT and
T Verizon and T Mobile. Again, though, I go back
to the fact that AT and T just is a
steady performer here. They have a great device promotion out there.
They continue to rely on that to drive subscriber growth,
and a continues to work for them.
Speaker 2 (03:01):
Hey, John, I know that the Verizon another stock that
you cover. On their call, they used, I guess, the
opportunity for President Trump's tax and spending bill to boost
some of their full your guidance metrics. ATT did not
do that, did they.
Speaker 3 (03:17):
No, they're actually this is interesting, Paul. They're taking all
the savings and they're driving it back into upgrading the
five G network, which they've been doing. It's nothing that
they've been ignoring it by a long shot, but they
are trailing Verizon and T Mobile just a bit in
the deployment of what's called midband spectrum, which is very
(03:39):
high capacity. So you know, the download speeds on your
phone are dictated by how much spectrum is deployed in
the network, and they're going to take those savings and
just lean hard into deploying more spectrum on a nationwide
basis to get network speeds and network coverage up.
Speaker 5 (04:00):
Is broadbandsila growth driver for AT and T or are
there signs of a slowdown?
Speaker 4 (04:07):
You know, it's a great question.
Speaker 3 (04:08):
So the other I guess word on this report in
my eyes was the fact that they just missed analyst
expectations for fiber net additions, the net new subscriber additions
that they had during the quarter in their fiber broadband business.
Having said that, they continued to quarter and in quarter
(04:30):
app deliver very stable results there. So I think the
fiber broadband business is healthy. It's actually healthier in many
ways than the mobility business, which is hyper competitive. But
to me, AT and T out of all the big
three is doing a great job just laying that foundation
(04:52):
for future growth by continuing to roll out new coverage
areas for fibers, I think they've done a great job.
There is sort of the summary statement that i'd make.
I'm broadband all right, John, thank you so much for
joining us.
Speaker 2 (05:08):
Appreciate it as always John Butler, he's a senior telecom
analyst for Bloomberg Intelligence.
Speaker 1 (05:14):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business App. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (05:28):
Paul Sweeney live here with you in the Bloomberg Interactive
Broker Studio. Streaming live on YouTube here, Ray Smack. In
the middle of earning season, let's talk toys. That sounds
kind of fun. Hasbro reported numbers. It looks solid to me.
They beat, they raise their guidance, get the stocks down
three percent. I just don't get this whole stock thing.
Lindsay Dutch, she's the pro. She understands what's going on here.
She's a consumer hardlines analyst at Bloomberg Intelligence. Lindsay talked
(05:51):
to us about what we learned from Hasbro and the
toy market.
Speaker 6 (05:56):
Yeah, hi, Paul, Hi aswell. Thanks for having me so yes, Paul,
just as you said, you know, strong quarter a really
a continuation from the first quarter, where all the strength
is really coming from Magic the Gathering, Monopoly Go and
Hasbro's digital gaming business. What we did not learn from
the release is really about the consumer and what the
(06:17):
outlook is for toys in the second half, and that's
causing a lot of uncertainty. You know what that back
half might look at look like I was.
Speaker 5 (06:26):
Going to ask how exposed is haspro to current consumers
spending trends, Like, especially in the toys and entertainment area,
do we see more middle income shoppers buying haspur or
what kind of consumers are you seeing?
Speaker 6 (06:38):
Yeah, so the toy business typically grows with GDP. It
has been you know, coming down a bit challenge over
the past couple of years. After the peak during COVID
when everyone was stuck at home buying a lot of toys.
This year was supposed to be a turnaround year for
toys and then early this year, you know, we got
hit with the tariff news, which created a lot of
(06:58):
uncertainty in the business. One is, you know, we don't
know how the consumer is going to react to broader
price increases, and we do expect increases on toys very specifically,
so companies like Hasbro and Mattel, you know, some of
the biggest toy makers in the globe, you know, are
really faced with that challenge in second quarter. Normally retailers
(07:22):
already start buying their holiday inventory. That didn't happen this year.
Those retailers, Walmart, Target, took a pause. So normally by
now we would sort of get a sense of holiday
But because of that pullback, you know, Hasbro saw their
consumer products segment see a sixteen percent decline in the
second quarter revenue because of that hold on those orders.
Speaker 2 (07:43):
I would have thought they would have tried to front
run the tariffs. Here, what's the company saying about when
they expect some of these retailers to place their orders.
Speaker 6 (07:52):
So they expect the orders to be sort of made
up in the third quarter. And the challenge with that is,
you know, some of those hotter toys that do sell
out maybe in the early holiday shopping season, there will
be very little time to sort of replenish on that end.
So Hasbro did continue their production, which you know they
do still make about fifty percent of their toy products
(08:13):
in China. They continued in May. You know, they took
some of that inventory on their books in the second quarter.
That's why we saw the inventory come up there. You know,
they're hoping that the retailers, you know, place more of
their orders in the third quarter, you know, ahead of holiday.
You know, the risk is they just don't really know
what those pre order will be and there will be
limited time for additional orders like in that fourth quarter
(08:38):
right before holiday.
Speaker 5 (08:40):
To your point. In April, the company warned the Times
CLID impact profits by as much as sixty million two
hundred and eighty million this year, and they did reduce
their Chinese manufacturing output to less than forty percent, or
at least plan to by twenty twenty six. If they
do that, will they pass on the cost to consumers?
And do you think consumers will bear the brunt of
that burden.
Speaker 6 (09:00):
Yes, so Hasbro is using multiple mitigation strategies. You know,
they have been very focused on cutting costs. You know,
prior to tariffs, they sort of accelerated some cost cutting
at the corporate level. They will be raising prices, I
think selectively on toys. They are also just going to
not sell certain toys in the US if it can't
(09:23):
it doesn't make financial sense to do so if they
can't raise the price and consumers would not buy it
at that price.
Speaker 5 (09:31):
So they're sort of.
Speaker 6 (09:31):
Using a mixed strategy. They had predicted tariffs to cost
sixty million to one eighty million on an annual basis.
Three months ago, they sort of dropped that impact closer
to the sixty million side. That's because of the lower
rate on the Chinese imports. They are working to diversify
the supply chain, but that will take time. The goal
(09:53):
of less than forty percent that's really by twenty twenty seven.
So in terms of this year, you know where their
supply chain is. They're sort locked in with that at
the moment, and they kind of have to work with
the price increases and sort of balancing where do I
increase price and not hurt the demand even more?
Speaker 2 (10:10):
All Right, Lindsay, thank you so much. We appreciate your analysis,
Sir Lindsay Dutch. She's a consumer hardlines senior retail analyst
for Bloomberg Intelligence space down there in our Princeton, New
Jersey campus, talk just about Hasbro, the toymaker. Had some
really good numbers and some good guidance, but there's still
tariff concerns out there surrounding this industry as well as others.
Stock trading off a little bit.
Speaker 1 (10:33):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple cocklay and Android
auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (10:47):
Right in the middle of earnings here today we saw Hilton,
the hotel company, I reported numbers and they lowered expectations
for net income and saying that demand for US hotel
bookings declined in the second quarter. Let's get the break
at that a little bit more detail, because boy, I
get on a plane, it just seems like it's packed,
and I assume those people are staying at hotels and everything.
Let's check in with Jody Lori, senior credit analyst for
(11:09):
Bloomberg Intelligence. She covers all the fun stuff, the gaming business,
the hotel business, the casino, the cruise is all that
good stuff. So she has a great view on the
consumer and kind of what's happening out there in that
part of the economy. Jody, what did you learn from
Hilton here? What are they saying about their business?
Speaker 7 (11:28):
So, Paul, I mean, I think what's so interesting is
they definitely tried to provide an upbeat, optimistic view. The
amount of times that they talked about the thawing that
after the freeze from tariffs was sort of interesting to hear,
and I mean, I think it fits a little bit
with the conversation that we've been having with clients is
that what we've been seeing in our data is twenty
twenty five summer should still be pretty strong, but I
(11:51):
think as we get into the latter part of the
year and then into next year, it's a little bit uncertain.
And I think they were trying to that economic data
is positive for them and will provide for additional sort
of demand, but it's still a little bit you know,
it's still a little bit hazy, at least for me,
(12:13):
and I mean more than anything, you know, they're so
focused on giving back to shareholders that and.
Speaker 2 (12:18):
There's a credit analyst that's not something you necessarily.
Speaker 7 (12:21):
Yeah, yeah, you know, Hilton's one of those companies that
we say, if they wanted to be investment grade, they
probably could work to it yesterday and would have been
investment grade five years ago. But you know, from a
margin standpoint, they're so much stronger than a lot of
their peers. But from a leverage standpoint, they just they're
happy being around three times three and a half times,
and they've indicated that they want to be a little
(12:42):
bit higher than where they currently are, So I mean,
I think they're going to invest in organic growth and
look at ways to sort of grow some of their
newer brands like Spark, which they've been talking about. And
the most interesting thing related to that is it seems
like they're looking outside the US for growth opportunities. And
maybe that's a function of the fact that while they
think the US is still having decent momentum, perhaps they
(13:05):
need to sort of look outside to sort of really
see the growth.
Speaker 5 (13:09):
Where are they finding that growth elsewhere? And is that
in relation to just the lower consumer confidence in the
US and the decline of international travelers. So then they
just decided maybe looking elsewhere US better. What was the
rationale behind that?
Speaker 7 (13:22):
So they actually talked about on the first quarter, they
talked about Canada and Mexico demand, and they said specifically
that it's such a small percentage, just like one percent
of their total revenues is Canada and Mexico, and inbound
US is certainly a large portion, I think, larger than
they sort of indicate. But I think they're also sort
of saying, Okay, yeah, it's going to be an effect,
(13:43):
but it's not that much effect. I think they are seeing.
And what we sort of heard on this most recent
call is that there is an element of trickle down
effect related to what's going on in the US, the
prevalence of travelers coming into the US VERSUS historically because
of the tariff and geopolitical environment, and so, you know,
(14:05):
they mentioned Saudi Arabia, they mentioned India, they mentioned turkeya
on the call, and I think they're looking at anywhere
there's potential growth opportunities. I mean, Hilton's so large and
global that it's not really surprising to me, but it
is sort of interesting when you hear a company that's
seventy five percent US dominant that they are sort of
looking to expand elsewhere.
Speaker 2 (14:26):
Hey, Trinty, we're hearing from you know, a number of
companies that depend upon travel that maybe international travel inbound
to the US is less than than it maybe in
past periods, maybe in part because of all this tariff discussion,
people deciding not to spend their travel dollars in the US.
What's Hilton say about that?
Speaker 7 (14:47):
So, Hilton didn't so much talk about it on this call,
per se, but they danced around it a little bit,
saying that they think that you know that with the
tariff situation sort of it hasn't resolved itself by any measure,
but with us getting over that shock of Liberation Day,
that they're now seeing that demand is picking up. They're saying,
(15:09):
you know, business conference travel, and so I mean, I
think they're sort of dancing around it. But if we recall,
I mean a lot of the companies in my space
still having gone back to pre COVID levels when it
comes to inbound US. I mean, we like to talk
about United Parks, which is formerly SeaWorld, because they talk
about it in their Florida Parks that they still haven't
seen the return of international travelers to pre COVID levels.
(15:32):
And so you add on top of that the tariff
effect in the geopolitical environment, you say, okay, if we
weren't back to pre COVID levels, and then you have
this component to it, I don't know if we'll get
back to pre COVID levels sometime soon.
Speaker 2 (15:45):
Jody, thanks so much. I always appreciate checking in with you.
Jody Lourie, she's a senior credit analyst for Bloomberg Intelligence,
talking to us a little bit about the Hilton numbers. Again,
the company took down a little bit of guidance and
maybe citing some of the uncertainty surrounding the tariffs they
cited as well as reduced. They also call that reduced
government travel. So maybe the whole doge thing people with
(16:05):
some of the government employees are maybe traveling aple I
hadn't thought about that.
Speaker 5 (16:08):
Business are also reducing travel, Like I mean, I don't
want to single out Bloomberg, but everyone like you only
really travel when it's mandatory. If you can do zoom,
you should do zoom. So we see it really.
Speaker 2 (16:18):
But off to account that not our salesforce. Our salesforces
out there all the time pressing the flesh with Bloomberg customers,
and that's a good thing. That's how it's done.
Speaker 1 (16:29):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarclay and Android Auto
with the Bloomberg Business App. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (16:43):
Switch gears to Technology Here we check in with Anaagrana,
Senior Tech Out also Bloomberg Intelligence, Honra. A lot of
news is going to be coming our way from your
tech space starting tonight after the clothes, we'll have Google Tesla,
then all the other tech names will be coming out
as well. I want to start with mike Soft. Can
you give us a summary or update of what's happening
(17:03):
with this software cyber breach here doesn't seem to be
impacting the stock that much. What's Microsoft saying? If anything?
Speaker 8 (17:13):
I think the news is out and frankly, you know,
apart from the one big breach last year where crowds
tried really got hurt, these breaches typically don't have that
big un an impact on the stock, frankly because you know,
it's a small portion of the one particular application, and
you know, I think the news story is far bigger
than what it has an impact on the stock. In fact,
(17:34):
if anything, people will be more inclined to buy Microsoft
security products to protect themselves down the road. They would
be more inclined to move more workloads to the cloud
to make sure that the you know, the online version
of the software was not impacted. So if you know,
it just sells by itself, some of the security products,
and these beaches obviously not a good headline for the company,
(17:54):
but you know, these things do happen quite a bit.
Speaker 5 (17:57):
How is the cloud business looking like these days, I
feel like it's one of the main drivers that growth
through many companies, from Amazon to Microsoft. As we're talking
about to most of the big tech giants. Is it
competition becoming more fierce than is there a leader emerging
in this space?
Speaker 8 (18:11):
See, the leader was always Aws, But frankly speaking, over
the last two years, Microsoft has really narrowed the gap
because of its open Ai relationship.
Speaker 4 (18:19):
They're the only company who's really.
Speaker 8 (18:21):
Seeing the biggest benefit of you know, all the searchers
we're doing in chag GPT because open Ai runs primarily
on Microsoft's cloud network. So when they report next week,
we are expecting a big number coming out of that
AI contribution. So Microsoft, I think, is the bigger beneficiary
right now amongst all the big, bigger vendors.
Speaker 2 (18:41):
So you know, it's interesting is it worth investors ranking
kind of who are the big cloud players, who are
the big AI players? Is it worth it? Or is
it better just to say, you know, AI is going
to kind of be all over the tech stack, and
I just got to be long tech. How do you
think about really getting quality exposed to that theme?
Speaker 8 (19:02):
Yeah, when you look at cloud, I think all of
the top four vendors will flourish and flourish well. When
that would be Aws, Microsoft, Google, and then Oracle after that,
so all four will make a lot of money.
Speaker 4 (19:14):
Then you want to dissect each one of them.
Speaker 8 (19:16):
Within this group, Microsoft is the one that's seeing the
current direct benefit.
Speaker 4 (19:21):
And that's because of open Ai. The other two, whether.
Speaker 8 (19:24):
It's Amazon or Google, will start to see more and
more revenue flow in because of the applications people are
building on their cloud platform. And then lastly on the
Oracle side, they are benefiting in another part of cloud,
which is more on the infrastructure side where they're getting
a lot of money or you know, future funding from
open Ai to create their data centers to help train
(19:45):
the bottle. So each one is slightly different, but I
would say as as you mentioned, the total basket you
know should do well over time.
Speaker 5 (19:52):
You cover tech and next week is a big week
for those companies and beyond tech. Be am author expected
to deliver nearly fifteen percent of profit growth and robust
demand for AI and that's compared to the virtually no
growth for the rest of the four hundred and nine
or three stocks. Are you watching anything any specific company
you're excited about and you mentioned you're looking at cloud,
but is there anything else that is factoring in your outlook?
Speaker 4 (20:15):
So there can be two elements of it.
Speaker 8 (20:17):
One is the cloud, the AI side of spending, and
the non AI side of spending. What we saw from
SAP yesterday and Inphasis this morning, and then you know,
taught at a couple of weeks ago, so that the
non AI tech spending is under pressure. People are not
spending as much because they are not sure how the
tariff related uncertainty is is playing out, so they're seeing
(20:39):
a delay in closing, closing of deals.
Speaker 4 (20:42):
And everything around it.
Speaker 8 (20:43):
But on the AI side, we anticipate strong results from Microsoft,
for example. So that's there the two dichotomy over there
between the two vendors. The third thing that we are
watching is actually what happens on the margin side of
things because a lot of these companies are investing very
heavily in AI. Because of that, the margins are going
to get squeezed. And for that, what we think is
(21:04):
going to happen is they're going to take reduction in force,
either through not hiding at the same pace that they
have been or basically laying off a portion of their
workforce in order to counter some of that pressure. So
those are the three theams that we are most interested
in right now.
Speaker 2 (21:19):
An Agrana absolutely, thank you, appreciate on Agrana Tech Analysts
Bloomberg Intelligence Agrana Mandeep Sing. Those are our two senior
tech analysts. They manage our global technology research effort for
Bloomberg Intelligence. We have close to I think twenty analysts
covering technology on a global basis, a lot based in Asia,
based in the US, and based in Europe. And that's
(21:40):
the way you have to cover it, folks. Tech is
an all compassing sector. It's the biggest part of the
SMP five hundred and you have to have the complete coverage,
and we do on a global basis, I think the
best tech research on the street with the best data.
Speaker 1 (21:54):
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weekday ten am to noon Eastern on Bloomberg dot com,
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