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Meta Seizes Its Moment to Spend Aggressively in the AI Race · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the
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  Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
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  Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App.
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  Speaker 1: Listen on demand wherever you get your podcasts, or watch
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  Speaker 1: us live on YouTube.
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  Speaker 2: Norma, Linda, Paul Sweeney.
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  Speaker 3: We're live here in on our Bloomberg Interactive Broker's studio.
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  Speaker 3: We're streaming live on YouTube as well as to check
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  Speaker 3: us out there as John's just reporting met a big,
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  Speaker 3: big earnings numbers last night after the close, stock up
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  Speaker 3: eleven and a half percent here today, all time high,
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  Speaker 3: fifty two week high, whatever you want to look at it.
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  Speaker 3: We're on a two trillion dollar market cap watch here
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  Speaker 3: one point ninety five trillion as we speak. Let's check
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  Speaker 3: in with Kurt Wagner, tech reporter for Bloomberg News. He's
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  Speaker 3: in Denver callout and he's worked out this scam. I
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  Speaker 3: have no idea how he did it, but it's a
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  Speaker 3: good gig for Kurt. Kurt talked to us about Meta here.
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  Speaker 3: Some people feel like, you know, it might be a
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  Speaker 3: little late to the AI party.
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  Speaker 2: I don't think that, and I.
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  Speaker 3: Don't know Zuckerberg was talking pretty guestly about the spending there.
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  Speaker 2: What'd you take away.
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  Speaker 4: I don't think they're late at all. I don't think
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  Speaker 4: that they have offered some of the same products that
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  Speaker 4: some of their rivals like open Ai and a topic
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  Speaker 4: have at Google. So they have been building AI models
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  Speaker 4: for you know, basically a decade.
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  Speaker 2: They mostly kept them in house.
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  Speaker 4: They use them, you know, in this case, they've been
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  Speaker 4: talking a lot about how they're using them to improve
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  Speaker 4: their own ad targeting and their own content recommendations. And
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  Speaker 4: so while they're not out selling access to their models
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  Speaker 4: and the way that rivals are, they're still building them.
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  Speaker 4: And you know, clearly the street's very happy with what's
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  Speaker 4: happening here, which is that their ads business, which is
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  Speaker 4: powered by Instagram and Facebook, is just a cash printing
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  Speaker 4: machine and they are taking all the profits from that
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  Speaker 4: and they're you know, funneling them into AI. And yesterday
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  Speaker 4: we saw that the ads business is doing better than
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  Speaker 4: expected and they're spending even more on AI, and that
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  Speaker 4: is a combination that people seem very happy with right now.
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  Speaker 5: Well, Kurt, even if there are people saying that Meta
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  Speaker 5: is late to the AI party, if you look at
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  Speaker 5: shares year to date, and you compare it against the
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  Speaker 5: others in the mag seven we are seeing it as
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  Speaker 5: the best performing stock, the second best performing stock, right
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  Speaker 5: behind Nvidio. What do you think is really propelled it
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  Speaker 5: forward to that magnitude here?
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  Speaker 4: Well, I think there's a couple of things. One, there's
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  Speaker 4: the Mark Zuckerberg factor of this. You can love him,
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  Speaker 4: you can hate him, but Mark Zuckerberg has a pretty
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  Speaker 4: strong history of you know, quite frankly, reaching the largest
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  Speaker 4: audience with his products. That is something he's done repeatedly
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  Speaker 4: throughout Meta's history, and he has sole control of this company.
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  Speaker 4: So if you are a believer in him, you are
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  Speaker 4: a believer in Meta right now. And I think that's
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  Speaker 4: one factor. And then I think the other is you
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  Speaker 4: know that reach matters a lot when you're talking about
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  Speaker 4: AI because when you build in this case, Meta AI
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  Speaker 4: is the name of their chatbot. They have put it
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  Speaker 4: into Facebook, Instagram, WhatsApp. It already has a billion monthly
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  Speaker 4: users simply because they have that existing audience. So where
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  Speaker 4: a lot of companies are building these AI products and
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  Speaker 4: then trying to find the audience for them, Meta already
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  Speaker 4: has the audience. So when they figure this out when
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  Speaker 4: they know if they're ray Ban Glasses, for example, take
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  Speaker 4: off in the way that they hope they will. They
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  Speaker 4: have the built in online audience already for these tools,
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  Speaker 4: and I think that that's something that a lot of
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  Speaker 4: people are optimistic about.
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  Speaker 2: Kert. You mentioned WhatsApp wall.
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  Speaker 3: I think I was covered in stock when they bought
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  Speaker 3: WhatsApp seven eight years ago. Are they finally starting to
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  Speaker 3: monetize whatsappen?
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  Speaker 2: So how are they doing it?
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  Speaker 4: They are starting to monetize what's up? They announced in
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  Speaker 4: June that they're going to start running ads and WhatsApp
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  Speaker 4: for the first time. If you're a history buff in
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  Speaker 4: terms of following Facebook history, you'll know that that's been
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  Speaker 4: a long time coming and there's been a lot of
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  Speaker 4: bumps and bruises along the way and get in there.
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  Speaker 4: But I will say the CFO, Susan Lee, she did
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  Speaker 4: warn yesterday in the earnings call that even though they
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  Speaker 4: are putting ads into WhatsApp, this is a long road.
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  Speaker 4: It is not going to be a material impact for
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  Speaker 4: the business in terms of revenue or ad impressions for
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  Speaker 4: the next few years. They're going to start slow. I
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  Speaker 4: think that makes sense for a couple of reasons, the
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  Speaker 4: first being that WhatsApp is popular in a lot of
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  Speaker 4: regions that aren't necessarily lucrative in terms of advertising. You know, India, Brazil,
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  Speaker 4: places like that. And then a second you're kind of
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  Speaker 4: trying to convince advertisers to shift budget perhaps from more
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  Speaker 4: lucrative things like Instagram or Facebook, and so I think
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  Speaker 4: it's going to be slow for people to maybe move
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  Speaker 4: over their money towards WhatsApp. But again, fast forward a
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  Speaker 4: few years from now, I think there is obviously potential here.
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  Speaker 4: That app has multiple billions of users globally.
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  Speaker 5: Kurt, It's hard to be a bear here on this stock.
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  Speaker 5: I'm looking at Wall Street ratings right now, seventy four
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  Speaker 5: people have a buy. We have five holds on the
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  Speaker 5: stock and then one cell and that's coming from BNP Paaraba.
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  Speaker 5: But if you really had to dig in and see
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  Speaker 5: what the overhas could potentially be here for this company,
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  Speaker 5: what would you stay or some areas that investors are
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  Speaker 5: looking to see a bit more of a push forward.
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  Speaker 4: Well, I do think the spending is a lot and
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  Speaker 4: so while the ads business continues to chug along, people
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  Speaker 4: are going to say, Okay, that's fine. If there is
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  Speaker 4: a stumble in this ads business, you know, heading into
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  Speaker 4: the holiday quarter or something like that. Suddenly people might
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  Speaker 4: start wondering why are they spending so much if the
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  Speaker 4: ads business isn't delivering.
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  Speaker 2: So that's one.
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  Speaker 4: The other is their reality labs division, that's the Quest
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  Speaker 4: VR headsets, things like that. That is a loss leader.
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  Speaker 4: I believe four point five billion dollars in losses just
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  Speaker 4: last quarter alone. They also mentioned on the call that
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  Speaker 4: Quest sales were down year over years, so that's a
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  Speaker 4: concern I would imagine for some people.
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  Speaker 2: Kurt, thank you for reporting. Appreciated.
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  Speaker 3: Kurt Wagner, Tech reporter, Bloomberg News in Denver, Colorado. I'm
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  Speaker 3: never driving I seventy again, up to the downs again.
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  Speaker 3: I made that value or so good.
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  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
• 6:03
  Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
• 6:06
  Speaker 1: get your podcasts, or watch us live on YouTube.
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  Speaker 3: All right, let's stuck a little bit healthcare here, Eli Lilly.
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  Speaker 3: I mean, it's always about, like the OBCD drugs, who's
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  Speaker 3: the winner, who's the loser, How big is the market.
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  Speaker 2: App but there's a lot more to talk about. I
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  Speaker 2: don't know Damian Guardet. He joins us here. He's a
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  Speaker 2: healthcare reporter.
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  Speaker 3: Eli Lily, the blockbuster diabetes drug Monjaro fell short of
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  Speaker 3: expectations that it would do a better job by preventing
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  Speaker 3: heart attacks and strokes than its older medicine, Trullicity.
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  Speaker 6: Is that a promiming Dabian It depends on how you
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  Speaker 6: look at it, but it does underline I think what
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  Speaker 6: you mentioned that the bar is so high for these medicines,
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  Speaker 6: both commercially and clinically.
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  Speaker 2: So what we learned today.
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  Speaker 6: Lily ran a study comparing Manjaro, the newer GLP one
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  Speaker 6: combination medicine, against its older GLP one called Trullicity, to
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  Speaker 6: determine whether it worked as well in preventing heart attacks
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  Speaker 6: and strokes. And the good news is the study met
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  Speaker 6: its goal. It proved non inferiority as a scientific term,
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  Speaker 6: which is to say it did just about as well
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  Speaker 6: as the older drug. The bad news, through the lens
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  Speaker 6: I think of a lot of investors, is it didn't
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  Speaker 6: prove to be superior, which was kind of the if
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  Speaker 6: not expectation, then kind of hoped for outcoming.
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  Speaker 5: So what's the biggest business here for Eli Lilly, I mean,
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  Speaker 5: is Manjarro one of their front running drugs that we're
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  Speaker 5: talking about here.
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  Speaker 6: It is so Monjarro is it's a little triggy because
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  Speaker 6: it's the same basic medicine, but when it's used for
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  Speaker 6: diabetes they call the drug Manjarro, and when it's used
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  Speaker 6: for obesity they call it zep bound. But it's the
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  Speaker 6: same scientific molecule underneath at all. And that combined is
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  Speaker 6: by far Lily's biggest growth driver, and.
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  Speaker 2: It's a medicine that is in demand.
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  Speaker 6: It was until relatively recently in shortage officially, and it
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  Speaker 6: is definitely paving the path to Lily becoming the most
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  Speaker 6: valuable drug company in the world. And it's also outpacing
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  Speaker 6: Novo Nordisk, the Danish company that really invented this market
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  Speaker 6: that's also had a lot of unfortunate news in recent years.
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  Speaker 6: Lily is lapping the competition there and is on pace,
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  Speaker 6: it's assumed to kind of dominate this market at least
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  Speaker 6: in the near termal So, some imoking.
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  Speaker 3: At the PGeo function in the bloomber terminal, it kind
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  Speaker 3: of breaks out kind of where the revenue comes from
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  Speaker 3: either by you know, business line or by geography. Cardio
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  Speaker 3: metabolic health, that's their biggest revenue line.
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  Speaker 2: Is that the obesity stuff. Yeah, that's inclusive of obesity
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  Speaker 2: and DiPT.
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  Speaker 3: I mean look at this, let's go twenty twenty one,
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  Speaker 3: that at thirteen billion of revenue.
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  Speaker 2: Okay, good business.
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  Speaker 3: Twenty twenty four it had about thirty billion business expected
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  Speaker 3: to be forty three billion this year, fifty two billion
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  Speaker 3: next year.
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  Speaker 2: Holy cow, that is out of control growth. No wonder
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  Speaker 2: they're so valuable.
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  Speaker 6: Well exactly, and it's I mean, that's what we've demonstrated,
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  Speaker 6: what Lily has demonstrated in sales just with the products
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  Speaker 6: that it has on the market. But I think when
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  Speaker 6: you look at the company's valuation, what's being priced in
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  Speaker 6: is assumed to come oral golp one, So they would
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  Speaker 6: have asks what we're talking about that could win approval
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  Speaker 6: next year at the earliest, and that is likely to
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  Speaker 6: both be a massive commercial product for obvious reasons, but
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  Speaker 6: really like democratize this therapeutic category because these are all
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  Speaker 6: injectable medicines that we're talking I am as.
• 9:04
  Speaker 3: The injector of this medicine on another person, which I enjoy.
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  Speaker 3: I get a cocktail out, we make a little party
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  Speaker 3: of it. But the oral thing that's going to open
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  Speaker 3: up the market like crazy, I would think there's probably
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  Speaker 3: a lot of people that don't want to don't.
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  Speaker 2: Enjoy doing the shots. I mean, a lot of people
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  Speaker 2: don't like needles.
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  Speaker 6: Yeah, and it's also going to probably diversify it. So
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  Speaker 6: a lot of the focus on these medicines is what percentage.
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  Speaker 2: Of weight loss do they drive?
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  Speaker 6: It could get it up to twenty five percent, for example,
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  Speaker 6: but for a lot of people they don't need to
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  Speaker 6: lose twenty five percent of their body weight. The pill
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  Speaker 6: seems to have a lower percentage body weight change. But
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  Speaker 6: the assumption is that there's a huge demand for that,
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  Speaker 6: and that when there's a multitude of these medicines, the
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  Speaker 6: heavy duty ones versus the lighter ones, then you could
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  Speaker 6: really meet a lot of the demand that people need.
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  Speaker 3: How about all the other stuff in the world, Like,
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  Speaker 3: I don't know, cancer, dementia, Where's where are they in that?
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  Speaker 2: Yeah, we're Lily in that type of thing.
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  Speaker 6: Well it Lily particularly does have an approved medicine and
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  Speaker 6: for Alzheimer's disease and a lot of drugs for cancer
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  Speaker 6: mostly in the pipeline that's been a major investment of THEIRS.
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  Speaker 6: But one thing that's notable about the golp ones, not
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  Speaker 6: to pull it back there, is that we've seen that
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  Speaker 6: in the long term, as this study demonstrates, it reduces
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  Speaker 6: the risk of heart attack and stroke. But likewise, there
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  Speaker 6: are observational studies tying it to reduce risk of Alzheimer's
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  Speaker 6: and of cancer, which follows reason in that these drugs
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  Speaker 6: basically make you eat less and in many cases drink less,
• 10:27
  Speaker 6: smoke fewer cigarettes. These are things that we know our
• 10:29
  Speaker 6: behavioral changes that prevent cancer, heart.
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  Speaker 2: Attack, and stroke.
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  Speaker 3: I think it's funny that these things came out at
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  Speaker 3: the same time as gummies came out, just saying.
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  Speaker 5: Well, I mean I think that there's there's well maybe
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  Speaker 5: there's a correlation there right, just need to find it.
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  Speaker 5: But I mean, when we think about this company, how
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  Speaker 5: are they in comparison to competitors right now? I mean,
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  Speaker 5: this is a massive company here.
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  Speaker 6: Yeah, Lily, I think HAS this is a long term,
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  Speaker 6: dating back about a century investment in diabetes research that
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  Speaker 6: Lily Has and the GLP one medicin grew out of.
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  Speaker 6: They began as diabetes streatments before they were discovered to
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  Speaker 6: have such profound effects on obesity. So I think Lily
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  Speaker 6: would say this is them carrying on the tradition, and
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  Speaker 6: their market cap and all of these kind of superlatives
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  Speaker 6: we can fix to them are just the markers of
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  Speaker 6: a success that they set in motion in years past.
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  Speaker 6: I would say other major American drug makers look at
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  Speaker 6: them with some envy and perhaps occasionally resentment, because they
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  Speaker 6: and Novo Nordisk are the leaders in GLP WAN Pfizer,
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  Speaker 6: Johnson and Johnson, Bristol, Myers.
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  Speaker 2: Squib Merk.
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  Speaker 6: All of the heavyweights of this sector missed out on
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  Speaker 6: that first wave of BCD drugs that have really driven
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  Speaker 6: the success of the industry in.
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  Speaker 3: Recent Here and I'll tell you this is how you
• 11:38
  Speaker 3: see it, nor you ask that question kind of where
• 11:40
  Speaker 3: do you see the difference here? How about valuation on
• 11:42
  Speaker 3: twenty twenty five estimates. This is on the BQ function, folks,
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  Speaker 3: And this comp sheet is curated by Bloomberg Intelligence, so
• 11:48
  Speaker 3: you know it's right. It's the right comps and the
• 11:51
  Speaker 3: right numbers. That's what the bi folks do. Four on
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  Speaker 3: twenty twenty five numbers. ELI Lilly Stock is trading at
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  Speaker 3: thirty four times earnings, the rest of the peer group
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  Speaker 3: fifteen times, so more than twice the valuation Wall Street
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  Speaker 3: is giving to Eli Lilly versus the other big cap
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  Speaker 3: names like you know, Johnson and Johnson at ev Murk.
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  Speaker 3: So just extraordinary there, Damian, thanks so much for joining us.
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  Speaker 2: Really appreciate the reporting there.
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  Speaker 3: Damien Gardeve, healthcare reporter our Bloomberg News, joining us live
• 12:17
  Speaker 3: here in our Bloomberg Interactive Broker studio.
• 12:21
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 12:25
  Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
• 12:28
  Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
• 12:31
  Speaker 1: get your podcasts, or watch us live on YouTube paulcom.
• 12:35
  Speaker 3: The company reported earnings a little bit disappointing. The stock
• 12:38
  Speaker 3: is down five point eight percent today, down two and
• 12:41
  Speaker 3: a half percent for the year. Let's break down what
• 12:43
  Speaker 3: happened in that quarter with an expert. Con John Savanni
• 12:46
  Speaker 3: joins the CEIs of Senior analysts cover semiconductors for Bloomberg
• 12:49
  Speaker 3: Intelligency joins us via zoom from San Francisco, Coujohn, you
• 12:53
  Speaker 3: to do this stuff for a living. You see all
• 12:55
  Speaker 3: these companies break down the Qualcom earnings.
• 12:59
  Speaker 2: What did you see?
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  Speaker 7: Yeah, there was nothing hugely wrong with these results. In fact,
• 13:03
  Speaker 7: there were a few positives, namely the beat on the
• 13:06
  Speaker 7: IoT due to better smart glass chip sales to Metti
• 13:10
  Speaker 7: and others. Auto is still continuing to be on track
• 13:13
  Speaker 7: despite the automotive end market seeing weakness. The handset guide
• 13:18
  Speaker 7: for next quarter which is for to come in in
• 13:21
  Speaker 7: line which to typical seasonality, which is actually surprisingly positive
• 13:25
  Speaker 7: despite given that they're going to have significant Apple share
• 13:28
  Speaker 7: law starting next quarter. That means that the gains they're
• 13:32
  Speaker 7: gaining in Android and Android continues to get better for
• 13:36
  Speaker 7: them for their chip sales. But all of this goodness
• 13:39
  Speaker 7: is still sort of near term or one time. The
• 13:42
  Speaker 7: big questions in investors' mind don't disappear from these this goodness. Unfortunately,
• 13:48
  Speaker 7: you know, there is going to be that big Apple
• 13:50
  Speaker 7: loss this year, this calendary and the next calendar year
• 13:54
  Speaker 7: that is going to weigh on their top line revenue,
• 13:56
  Speaker 7: and there is no offset to completely offset loss, so
• 14:01
  Speaker 7: that's going to stay. The diversification efforts in IoT and
• 14:04
  Speaker 7: Auto and the PC and the XR, etc. Is moving
• 14:09
  Speaker 7: on track, but it's not sexy enough or new enough
• 14:12
  Speaker 7: for in the near term to get investors excited about
• 14:15
  Speaker 7: this name.
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  Speaker 5: And that's what I'm seeing the rest of the street
• 14:18
  Speaker 5: saying as well. I mean, the CEO just said in
• 14:19
  Speaker 5: the interview with Ed Ludlow that they see content in
• 14:22
  Speaker 5: the automotive space accelerating here. But then we see the
• 14:26
  Speaker 5: print that we just are analyzing right now in the
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  Speaker 5: street is saying that weakness in the handset and automotive
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  Speaker 5: chip sales sector, that all coming in weaker has really
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  Speaker 5: kind of put a damper here for investors. How much
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  Speaker 5: runway do you think that the company has here?
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  Speaker 7: I mean, you know, they've been pitching this diversification story
• 14:43
  Speaker 7: for a while now. They have to give them credit.
• 14:47
  Speaker 7: They have made meaningful progress in a lot of these avenues.
• 14:51
  Speaker 7: The automotive and IoT still looks to be on track
• 14:54
  Speaker 7: to get to that twenty two billion dollars target that
• 14:57
  Speaker 7: they've promised. You know, once you get there, it will
• 15:00
  Speaker 7: be enough to offset all the Apple losses. It's just
• 15:03
  Speaker 7: it's just moving very slowly, which is good. It is
• 15:06
  Speaker 7: still moving consistently, but slowly. And in the times that
• 15:09
  Speaker 7: we are in right now, and an investor in Semi
• 15:11
  Speaker 7: has the optionality to look at all the fast growing
• 15:14
  Speaker 7: AI names where most of the spending is coming. It's
• 15:17
  Speaker 7: just very hard to get people excited very quickly about
• 15:21
  Speaker 7: still investing in a company which is still primarily to
• 15:23
  Speaker 7: dat driven by handset revenues.
• 15:25
  Speaker 3: Ku John, what is what is Qualcomm? And maybe some
• 15:27
  Speaker 3: of your other chip names, What are they saying about
• 15:29
  Speaker 3: tariffs about thirty seconds?
• 15:32
  Speaker 7: Well, most of the companies in our coverage are not
• 15:35
  Speaker 7: calling out tariff impact directly. You know there some companies
• 15:40
  Speaker 7: have you know, decided to take a step forward and
• 15:43
  Speaker 7: call some kind of pollons. We heard from Christiana where
• 15:46
  Speaker 7: and Qualcom is saying this, haven't seen no pollons. It's
• 15:49
  Speaker 7: very hard to DeLine it because you know, initially from
• 15:53
  Speaker 7: our channel checks, we believe they're where some pols pullions
• 15:56
  Speaker 7: because of tariff fears. But as the discussions and the
• 15:59
  Speaker 7: news have sort of died down, the risk for that
• 16:01
  Speaker 7: has reduced, so the consumers which we are initiating politics
• 16:04
  Speaker 7: might have normalized. So we're not seeing a lot of
• 16:07
  Speaker 7: impact on the semi space for the most part from tariffs,
• 16:10
  Speaker 7: except for this movement between two Q and three Q demand.
• 16:13
  Speaker 3: Good John, thanks so much for joining Uskunjohn, So, honey,
• 16:15
  Speaker 3: he's a senior and I's covering of semiconductors for Bloomberg
• 16:18
  Speaker 3: Intelligence based out there in San Francisco.
• 16:21
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 16:25
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• 16:28
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• 16:31
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• 16:35
  Speaker 2: Comcast reported results here.
• 16:39
  Speaker 3: I guess they lost fewer subscribers, and that's kind of
• 16:41
  Speaker 3: a net wind that stocks up one point six percent
• 16:44
  Speaker 3: for the day, down twelve percent for the year. It
• 16:47
  Speaker 3: just feels like there's a lot of headwinds for this industry,
• 16:49
  Speaker 3: the cable TV slash broadband industry. Keitha Ranganath, and she
• 16:53
  Speaker 3: covers all the media stuff for Bloomberg Intelligence.
• 16:56
  Speaker 2: Keitha.
• 16:56
  Speaker 3: What you see from Comcast numbers today?
• 17:00
  Speaker 8: Yeah, thanks so much, Paul. So, what happened really was
• 17:03
  Speaker 8: last week we had Charter, which is the second largest
• 17:05
  Speaker 8: cable or the second largest broadband operator reporting. They reported
• 17:10
  Speaker 8: broadband subscriber numbers that were extremely weak. Losses were much
• 17:13
  Speaker 8: higher than what you know the investment community was expecting.
• 17:17
  Speaker 8: That triggered a thirty percent lunge in Charter stock price
• 17:21
  Speaker 8: and generally spooked Comcast investors as well. So there was
• 17:24
  Speaker 8: a lot of kind of panic and nervousness coming into
• 17:26
  Speaker 8: today's report. And Comcasts did lose subscribers. They in fact
• 17:30
  Speaker 8: lost the most number of subscribers that they ever have
• 17:33
  Speaker 8: lost in their broadband business. But it was still better
• 17:36
  Speaker 8: than what the street was fearing, and that's why we're
• 17:38
  Speaker 8: seeing a little bit of what you know, you can
• 17:39
  Speaker 8: call a relief rally here for Comcast.
• 17:42
  Speaker 2: Absolutely.
• 17:43
  Speaker 5: I mean, what is the broader market looking like right now?
• 17:45
  Speaker 5: I mean, you've compared it against Charter, But how are
• 17:48
  Speaker 5: we thinking about broadband right now?
• 17:50
  Speaker 8: Yeah, So broadband really has been, you know, at least
• 17:53
  Speaker 8: over the past few years, NARA has been completely dominated
• 17:55
  Speaker 8: by the cable industry. So just you know, even up
• 17:59
  Speaker 8: to two or three years ago, cable had almost a
• 18:02
  Speaker 8: sixty seven percent share of the you know, home broadband
• 18:06
  Speaker 8: what we call the fixed broadband market. But with the telecoms,
• 18:10
  Speaker 8: so with AT and T, Verizon and T Mobile coming
• 18:13
  Speaker 8: in and becoming extremely aggressive in terms of two of
• 18:16
  Speaker 8: their product offerings, so one which they call fixed wireless,
• 18:19
  Speaker 8: which is basically you know, also called five G home
• 18:22
  Speaker 8: Internet and the other being fiber, and with both of
• 18:26
  Speaker 8: those on the fixed wireless really from a pricing perspective,
• 18:29
  Speaker 8: because they're only charging about fifty dollars or so a month,
• 18:31
  Speaker 8: so they're really competing with cable on the low end.
• 18:34
  Speaker 8: And then if you want a superior product a cable
• 18:36
  Speaker 8: in terms of both upload and download speeds, you go
• 18:38
  Speaker 8: for fiber. So they're really attacking cable from both ends.
• 18:41
  Speaker 8: And that's where we're seeing kind of this intense competition
• 18:45
  Speaker 8: for the cable operators like a Charter Don Comcast that
• 18:48
  Speaker 8: have been losing subscribers and losing subscribers really at a
• 18:51
  Speaker 8: pretty you know, alarming pace. The problem is that they're
• 18:55
  Speaker 8: going to continue to lose subscribers, and that's you know,
• 18:58
  Speaker 8: that's kind of how we're framing it for the cable
• 19:00
  Speaker 8: investors right now.
• 19:02
  Speaker 2: All right, KEITHA. Comcast is a big company. It's a
• 19:04
  Speaker 2: diversified company.
• 19:05
  Speaker 3: It also owns NBC Universal, but that's also a challenging
• 19:10
  Speaker 3: part of the business. Where are we in terms of
• 19:13
  Speaker 3: that company maybe selling or splitting off some of their
• 19:16
  Speaker 3: cable network businesses.
• 19:17
  Speaker 2: What's the status?
• 19:19
  Speaker 8: Yeah, so they are spinning off their cable network's business
• 19:21
  Speaker 8: that is their most challenged portion of the whole NBC portfolio.
• 19:27
  Speaker 8: They are spinning it off into a company called Versuent
• 19:29
  Speaker 8: that should happen a little bit later this year. So
• 19:32
  Speaker 8: once that happens, then you're left, you know, as far
• 19:35
  Speaker 8: as the NBC asset mixes concerned, you have the broadcast network,
• 19:38
  Speaker 8: which is you know, the NBC Broadcast network. You have Peacock,
• 19:41
  Speaker 8: which is their streaming platform, and then you have the
• 19:43
  Speaker 8: slightly higher growth assets. So remember they are investing very
• 19:47
  Speaker 8: big in their theme park business. They just opened Epic
• 19:50
  Speaker 8: Universe reported some really stellar results today in terms of
• 19:53
  Speaker 8: revenue growth thanks to Epic. And then of course there's
• 19:56
  Speaker 8: studio business. You know, I don't know if you saw
• 19:58
  Speaker 8: the news, but they already have one of their movies, Odyssey,
• 20:02
  Speaker 8: which is a Chris Nolan movie for which they're pre
• 20:04
  Speaker 8: selling tickets a year in advance. So their studio business
• 20:08
  Speaker 8: and really shape as well.
• 20:10
  Speaker 5: So executives have acknowledged that competition in broadband still remains
• 20:13
  Speaker 5: quote unquote intents, especially when we think about other wireless
• 20:17
  Speaker 5: companies like AT and T for instance, and we're seeing
• 20:20
  Speaker 5: shares down for Comcast down about eleven percent year to date. Here,
• 20:24
  Speaker 5: how are we thinking about competition as it relates to Comcasts.
• 20:28
  Speaker 8: Yeah, competition is going to be a huge factor for
• 20:31
  Speaker 8: Comcast down the road. So you know, Paul talked about
• 20:34
  Speaker 8: Comcast being a diversified company. Yes, they have exposure to
• 20:37
  Speaker 8: you know, the cable systems, but they also can diversify
• 20:40
  Speaker 8: a little bit with NBC. But still cable brings in
• 20:43
  Speaker 8: eighty to eighty five percent of the company's EBITDA, so
• 20:46
  Speaker 8: it's really important for them to have some kind of
• 20:49
  Speaker 8: visibility into their broadband business. So again, competition is intense.
• 20:54
  Speaker 8: You know, both Comcasts and Charter refer to this. It's
• 20:57
  Speaker 8: going to continue to be intense just because we're seeing very,
• 21:00
  Speaker 8: very aggressive fiber rollouts from all of the telecom operators.
• 21:05
  Speaker 8: So we don't necessarily expect the cable broadband business for
• 21:08
  Speaker 8: Comcast to return to growth. However, they are trying desperately
• 21:13
  Speaker 8: to kind of really cub SHN and so we're seeing
• 21:16
  Speaker 8: them kind of really you know, go very aggressively after promotions,
• 21:20
  Speaker 8: kind of tweak their pricing and packaging strategy. So that's
• 21:24
  Speaker 8: kind of going to help them defend their turf a
• 21:26
  Speaker 8: little bit. But I'm not necessarily sure, it's going to
• 21:28
  Speaker 8: be a game changer, so competition is a huge issue
• 21:30
  Speaker 8: for them.
• 21:31
  Speaker 2: Have you been to Epic Universal yet?
• 21:33
  Speaker 8: Not yet?
• 21:35
  Speaker 3: We got to get her over there to Yeah, so
• 21:37
  Speaker 3: we'll see, all right, Keitha, thanks so much for joining us.
• 21:39
  Speaker 3: Kethan Rogennathan us media anasts form Bloomberg Intelligence.
• 21:43
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