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Peloton Tumbles After Layoffs , Tech Earnings · Bloomberg Intelligence

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Speaker 3: We're just talking about Peloton.
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Speaker 4: A lot of news there switching out to CEO and
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Speaker 4: that's never good. It's checking with Mark German. He is
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Speaker 4: a Bloomberg News reporter based in Los Angeles.
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Speaker 3: Mark, I know you did the reporting on this story.
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Speaker 3: What's up with the CEO?
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Speaker 5: Yeah, Barry McCarthy two years he's out. I'm honestly surprised
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Speaker 5: that he stayed this long. Nothing really to do with
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Speaker 5: his age. He's in his seventies. He came out of
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Speaker 5: retirement for this job. He used to be the CFO
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Speaker 5: of Netflix and Spotify, but this was a tough turnaround job.
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Speaker 5: His predecessor, John Foley, really left them in a hole.
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Speaker 5: For those who don't remember, at the height of the pandemic,
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Speaker 5: Peloton exploded. Everyone was buying bikes in order to work
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Speaker 5: out at home when gyms were closed and fully and
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Speaker 5: Peloton made this bet, which obviously in hindsight, we know
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Speaker 5: was a terrible bet that gyms would continue to be closed,
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Speaker 5: COVID would last forever, the pandemic would never end, nobody
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Speaker 5: would leave their homes and apartments ever. Again, they built
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Speaker 5: a bunch of bikes. That's the bet they made, because
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Speaker 5: they built. They started building a facility in Ohio to
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Speaker 5: build many more bikes. They invested and grew the company
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Speaker 5: so quickly, right, and then when things started to reopen,
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Speaker 5: Peloton fell flat on its face. They've had to lay
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Speaker 5: off thousands of thousands of people. They had to restructure
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Speaker 5: the whole company, and it was a hole that you
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Speaker 5: couldn't really dig yourself out of. McCarthy was able to
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Speaker 5: get Apple to sorry, Peloton to free cash flow. But
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Speaker 5: at this point, their share price is about three dollars
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Speaker 5: a share, sales are down, they continue to miss their estimates.
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Speaker 5: They continued to miss their own forecasts. Time for him
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Speaker 5: to move on, And I think he made the prudent
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Speaker 5: decision for himself. And I'm surprised it took this long.
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Speaker 6: So he was you mentioned CEO of Netflix and Spotify, right,
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Speaker 6: So he is this subscription based guy, so right, see
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Speaker 6: if I'm sorry, So he's a subscription guy. So are
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Speaker 6: we learning anything about what Peloton will do and how
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Speaker 6: their business model will evolve.
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Speaker 5: Well, he's you know, he was the he's the outgoing
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Speaker 5: CEO Peloton, of course, and he did implement lots of
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Speaker 5: subscription based features into the company. One of the first
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Speaker 5: things he did was a subscription model for Peloton hardware,
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Speaker 5: so you could actually lease a Peloton versus paying one
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Speaker 5: thousand and fifteen hundred dollars outright for it. So that
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Speaker 5: was a big thing he did. The other thing is
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Speaker 5: they've expanded their content offerings, They've expanded their digital app tremendously,
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Speaker 5: and these are all subscription based products. So he's sort
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Speaker 5: of turned it into a subscription. Now, you didn't ask
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Speaker 5: me this, but I will make my projection of my own.
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Speaker 5: I think that they're going to try to sell this
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Speaker 5: thing now, right, laying off more people, doing a two
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Speaker 5: hundred million dollars restructuring. They have no CEO in place now,
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Speaker 5: two of their board members are you know, taking over
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Speaker 5: a new board member or one of their old board
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Speaker 5: members is becoming their new chairman. This would make a
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Speaker 5: good fit for something like Amazon Prime or for Netflix,
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Speaker 5: right your Netflix or prime description get a little bit
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Speaker 5: more valuable because it comes with fitness content. Maybe one
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Speaker 5: of these companies can pull in all that content for
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Speaker 5: under a billion dollars. I think that's the smart move
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Speaker 5: for Peloton's board at this point. Try to get rid
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Speaker 5: of this thing.
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Speaker 4: Wow, all right, Mark, great stuff, great reporting. Really appreciate
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Speaker 4: you taking a few minutes of your time, Mark Herman, you're.
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Speaker 1: thirty s.
3:46
Speaker 3: Break down a little bit more on Quacom.
3:49
Speaker 4: Angela Zino joins as vice president and senior equity analyst
3:52
Speaker 4: for c fr A Research in New York.
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Speaker 3: Angela, what's your takeaway here? The market certainly likes what
4:00
Speaker 3: soft from Qualcom. What's your takeaways?
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Speaker 6: Yeah?
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Speaker 7: No, we we love it.
4:04
Speaker 4: You know.
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Speaker 7: We we upgraded the stock to a buy actually on
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Speaker 7: the news. I mean, typically we hate upgrading near near
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Speaker 7: the highs for a stock like this, but it's warranted
4:14
Speaker 7: and I think kind of The biggest takeaway on our
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Speaker 7: end is this is a company that is clearly going
4:20
Speaker 7: to see some significant different diversification away from smartphones over
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Speaker 7: the next couple of years. I think a big concern
4:25
Speaker 7: of hours was eventually Qualcom would lose that Apple business,
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Speaker 7: right as Apple kind of starts, you know, internally designing
4:32
Speaker 7: their motives at some point in time might be a
4:34
Speaker 7: twenty six, twenty seven to twenty eight things, but it
4:36
Speaker 7: would happen at some point in time. But that's that
4:39
Speaker 7: you kind of look at what they just did here.
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Speaker 7: Android ecosystem is definitely coming back, specifically in China, grew
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Speaker 7: north of forty percent. More importantly, I think the numbers
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Speaker 7: that they gave out for that automotive pipeline extremely impressive,
4:52
Speaker 7: kind of growing from thirty billion eighteen months ago to
4:55
Speaker 7: about forty five billion now. That provides some really nice
4:59
Speaker 7: visibility as you go. I went to twenty twenty sixth
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Speaker 7: and beyond, and then you guys highlighted the ai PC opportunity,
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Speaker 7: and I think that's a really undappreciated story. They didn't
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Speaker 7: throw any numbers out as far as aipcs are concerned
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Speaker 7: in their opportunity there this quarter, but they did say
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Speaker 7: that they were going to start throwing those that type
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Speaker 7: of numbers, those type of numbers out next quarter, So
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Speaker 7: I think that also is a potential catalyst that we
5:20
Speaker 7: can kind of see as they kind of go into
5:22
Speaker 7: their June quarter results in July.
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Speaker 6: All right, a lot to break through breakdown on that,
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Speaker 6: And we'll get to Apple in this a second. But
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Speaker 6: where do we learn from Qualcomm of where we are
5:30
Speaker 6: in the smartphone cycle?
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Speaker 7: Yeah, I mean, as far as the smart phone cycle
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Speaker 7: is concerned, Hey, listen, this is this is a market
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Speaker 7: that we think is still you know, peaked out in
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Speaker 7: twenty sixteen. We don't see it getting back to those
5:42
Speaker 7: levels anytime in the near future. But that said, I
5:45
Speaker 7: think what the real key takeaway here for Qualcom is
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Speaker 7: concern is we were looking for low single digit growth
5:52
Speaker 7: as far as the smartphone market is concerned. But more importantly,
5:56
Speaker 7: the mix, especially on the Android side of things, will
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Speaker 7: continue to kind of to shift towards more premium end devices.
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Speaker 7: That's something that Apple has clearly benefited from over the
6:06
Speaker 7: years from a broader smartphone market, but as we kind
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Speaker 7: of see that increasingly take place on the Android side,
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Speaker 7: I think specifically from AI related smart smartphones. That provides
6:17
Speaker 7: greater content growth for Qualcom. So Qualcom will be able
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Speaker 7: to outgrow the smartphone market here over the next couple
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Speaker 7: of years. We think because of that, you know, the
6:26
Speaker 7: content games that they're seeing, unlike what you're seeing from
6:29
Speaker 7: the likes of you know, Corvo and Skyworks, which just
6:32
Speaker 7: you know, the last two nights, you know, reported results
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Speaker 7: that were pretty abysmal.
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Speaker 4: Hey, Angel, just a naive question for me. I just
6:39
Speaker 4: don't know the answer, but I do know there they
6:41
Speaker 4: sell a lot of chips into China.
6:44
Speaker 3: Is that a risk for them? And if so, how
6:46
Speaker 3: do they mitigate it?
6:48
Speaker 7: Yeah, I mean that's a great point. I mean, geopolitical
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Speaker 7: risks are always out there, and you know, I think
6:54
Speaker 7: you know, it's been an issue that kind of Qualcom
6:57
Speaker 7: has had to contend with. I mean, they were more
7:00
Speaker 7: you know, relevant, and let's say, you know, Huawei is
7:02
Speaker 7: ecosystem here years ago and you kind of look at
7:04
Speaker 7: what they did last night, and they're sincely going to
7:07
Speaker 7: be completely gone from Huawei phones by the end of
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Speaker 7: this calendar year. So I think in some respects they're
7:14
Speaker 7: going to be forced out, you know, in certain instances
7:17
Speaker 7: of you know, certain devices out there. But yeah, I
7:21
Speaker 7: think that's a great question. I don't know if there's
7:24
Speaker 7: a way of necessarily mitigating that risk out there. But
7:29
Speaker 7: you know, in the same respect, a lot of kind
7:31
Speaker 7: of the the the chips that they sell into China
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Speaker 7: are also not necessarily getting sold into the China market.
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Speaker 7: They're getting kind of pushed out in kind of getting
7:40
Speaker 7: sold across the rest of the world, even if they
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Speaker 7: are China related phones. But it is a Listen, it's
7:45
Speaker 7: a it's a risk out there over time. Absolutely.
7:48
Speaker 6: You mentioned the AIPC cycle, which leads us to some
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Speaker 6: sort of the AI smartphone cycle, which leads us to
7:55
Speaker 6: Apple trying to connect all those jobs for us. I'm
7:57
Speaker 6: trying I do if that work. But what kind of
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Speaker 6: AI computer AI phone cycle do you think we could
8:03
Speaker 6: be under and when does that kind of hit.
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Speaker 7: So, you know, as far as Apple is concerned, I
8:10
Speaker 7: think this is an absolutely massive opportunity for them. Hearing
8:14
Speaker 7: and Calendar twenty twenty four, and you know, the way
8:18
Speaker 7: we would look at it is, listen, the results here
8:19
Speaker 7: are going to be tonight are going to be what
8:21
Speaker 7: they are going to be. We don't expect anything good.
8:24
Speaker 7: But as as soon as next week, you're going to
8:26
Speaker 7: start going into a refresh cycle of iPad announcements. You're
8:29
Speaker 7: going to see Developers Conference in June, and then you're
8:32
Speaker 7: later this year. We do think you're going to get
8:34
Speaker 7: you know, on device AI smartphones on the you know,
8:37
Speaker 7: the iPhone side of things, as well as another upgrade
8:40
Speaker 7: cycle opportunity on the Mac side of things. So this
8:43
Speaker 7: is a really interesting opportunity because we expect them a
8:45
Speaker 7: refreshed essentially their entire hardware ecosystem here over the next
8:49
Speaker 7: kind of eight to nine months, and we do think
8:51
Speaker 7: that is underappreciated to an extent. Whether or not kind
8:54
Speaker 7: of consumers are going to go up you know, go
8:56
Speaker 7: out there and actually you know, upgrade their devices to
8:59
Speaker 7: these kind of AI enabled you know devices, remains to
9:03
Speaker 7: be seen. It all depends on what exactly Apple kind
9:07
Speaker 7: of rolls out, but we know they're going to put
9:09
Speaker 7: some crazy marketing power behind all of this, right, and
9:12
Speaker 7: we do think that there is potential for them to
9:14
Speaker 7: kind of at least increase pricing across certain aspects of
9:17
Speaker 7: their ecosystem. So that should also kind of help support
9:21
Speaker 7: you know, an improving revenue trajectory as we get at
9:24
Speaker 7: least into the iPhone sixteen cycle later this year.
9:28
Speaker 4: So in reality, though, Angel, what can the company say
9:33
Speaker 4: today about China?
9:34
Speaker 3: Can they say?
9:35
Speaker 4: I mean, because I think it's unclear whether their challenges
9:39
Speaker 4: in China are from competition from you know, changing consumer
9:45
Speaker 4: behaviors relates to buying Chinese products or anti American products.
9:49
Speaker 4: I don't know how to kind of phrase that out
9:51
Speaker 4: or parse that out.
9:52
Speaker 3: What can they say? What's the market hoping to hear?
9:56
Speaker 7: Well, I'll tell you what I'm hoping to hear. That
9:58
Speaker 7: would help me in terms of the China story. The
10:01
Speaker 7: China we think China revenue declines are probably going to
10:04
Speaker 7: be closer to fifteen to twenty percent, which is worse
10:07
Speaker 7: than expectations out there. But more importantly, I think is
10:10
Speaker 7: going to be exactly what they have to say about
10:14
Speaker 7: the China ecosystem out there, and kind of what they
10:18
Speaker 7: have to say about the installed base. If they can
10:20
Speaker 7: kind of come out and say, hey, listen, the you know,
10:22
Speaker 7: we're seeing significant declines out there, and you know, maybe
10:26
Speaker 7: part of it is because, hey listen, you've got some
10:29
Speaker 7: tough comps out there. Maybe part of it is they
10:31
Speaker 7: don't have an AI enabled device out there where. You know,
10:34
Speaker 7: other China you know, OEMs out there are kind of
10:38
Speaker 7: rolling out their AI enable devices out already, and then
10:41
Speaker 7: of course the Huawei Play but they can come out
10:44
Speaker 7: and say, hey, listen, the installed base continues to remain
10:48
Speaker 7: either the same or incrementally grow out in China. I
10:51
Speaker 7: think that would alleviate some of the concerns out there
10:54
Speaker 7: about the China ecosystem, at least for US, and would
10:59
Speaker 7: also support view that this might be more of a
11:01
Speaker 7: cyclical thing than a circular structural thing.
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Speaker 6: Okay, here's my question. I have an AI smartphone. What
11:06
Speaker 6: is that going to do for me that my phone
11:08
Speaker 6: doesn't do?
11:08
Speaker 3: Now?
11:08
Speaker 6: Do we know the answer to that?
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Speaker 8: Angela?
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Speaker 3: Do we know that?
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Speaker 7: I mean, listen, I think when you kind of look
11:15
Speaker 7: at the and you know, you look at what the
11:17
Speaker 7: S twenty I think, you know, the most notable kind
11:21
Speaker 7: of AI enabled phone that's out there right now, at
11:23
Speaker 7: least from minuder saying, is the S twenty four with Samsung.
11:26
Speaker 7: And they've got some kind of incremental you know, you know,
11:31
Speaker 7: changes out there in terms of you know, supporting multi
11:33
Speaker 7: modal capabilities, translation, all that kind of stuff. It's not
11:37
Speaker 7: necessarily anything groundbreaking in nature, right. I think what's going
11:42
Speaker 7: to be more important, at least from from Apple's perspective,
11:44
Speaker 7: is what they can kind of do in terms of
11:46
Speaker 7: things like you know, content creation, imaging, all that kind
11:49
Speaker 7: of stuff. Will it kind of get some of the
11:52
Speaker 7: gen Z population out there. I'm a little bit more
11:54
Speaker 7: interested in potentially upgrading towards these devices. But to your point,
11:59
Speaker 7: you know, is there anything kind of earth shattering right now,
12:01
Speaker 7: some kind of killer opportunity out there on the AI side?
12:04
Speaker 7: I thinks I think that remains to be seen. It
12:06
Speaker 7: all depends on what some of these OEMs kind of
12:08
Speaker 7: come out with and showcase that the consumers.
12:11
Speaker 6: Is it gonna like do my laundry for me?
12:13
Speaker 9: Like?
12:13
Speaker 6: I mean, there's you guys think about these things, right?
12:16
Speaker 8: Oh man? Do my taxes? All right?
12:18
Speaker 6: Angela, thanks a lot. Angela Zio, vice President, senior equity
12:20
Speaker 6: analyst at cfr A Research.
12:22
Speaker 1: Joining us there, you're listening to the Bloomberg Intelligence Podcast.
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Speaker 8: We're also live on YouTube, so.
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Speaker 6: Go ahead and check us out. Okay, so the market's
12:52
Speaker 6: kind of rolling over a little bit here. We got
12:54
Speaker 6: through some earnings. We do have Apple after the bell,
12:56
Speaker 6: we get jobs tomorrow dot dot dot. Then what like,
13:00
Speaker 6: what's your big takeaway? What's going to be the next catalyst?
13:02
Speaker 6: Joining us in studio to discuss is carol'sh life.
13:06
Speaker 9: She is?
13:07
Speaker 6: Where's the thing there? We go cio at BEMO Family Office.
13:11
Speaker 6: I knew it was there, Carol. I don't think I've
13:12
Speaker 6: ever seen you in person.
13:16
Speaker 10: Hiding out in the Midwest a lot.
13:18
Speaker 8: No, this is very exciting.
13:19
Speaker 10: Yeah, it's very exciting for me. I love being in studio.
13:22
Speaker 6: Okay, great, well, Carol, it's great to see you in person.
13:25
Speaker 6: What is going to be your next catalyst that you're
13:27
Speaker 6: looking for within the market. We keep getting through these
13:29
Speaker 6: big events. It's a little or no fanfare. So what's next?
13:33
Speaker 10: Well, and I think the most interesting thing is is
13:35
Speaker 10: to take it up a level and instead of focusing
13:38
Speaker 10: on every piece of data, because the FED has kept
13:40
Speaker 10: us really data dependent for a very long time. Is
13:43
Speaker 10: to focus on the overarching trend and there's lots of
13:46
Speaker 10: really interesting things going on intermediate and longer term, especially this,
13:51
Speaker 10: even though it's talked about, it's largely underappreciated, the secular
13:57
Speaker 10: trends we've got going on in infrastructure built not just infrastructure,
14:01
Speaker 10: but also that implies that we have to build data centers,
14:04
Speaker 10: which means we have to hook them to the grid,
14:06
Speaker 10: which the grid, you know, is difficult getting them hooked.
14:09
Speaker 10: So the energy play utilities. There's lots of different ways
14:14
Speaker 10: to play this, and you can make an argument that
14:16
Speaker 10: this is the biggest infrastructure spend or the biggest productivity
14:23
Speaker 10: potential boost we've had since we put the interstates in
14:26
Speaker 10: in the fifties and completely changed the complexion of the
14:29
Speaker 10: United States. And so there's lots of stuff going on there.
14:32
Speaker 10: It can be easy to get caught in the in
14:35
Speaker 10: the near term, we've got an election coming up, we've
14:38
Speaker 10: got more FED meetings, more data, but it's important to
14:40
Speaker 10: pull out of that and keep a longer term perspective.
14:44
Speaker 3: William Woods University, Ulton, Missouri Awesome.
14:47
Speaker 10: I was an equestrian science major. I thought I was
14:49
Speaker 10: going to horse trainer.
14:52
Speaker 3: Yep, running money.
14:57
Speaker 10: I did get a business degree while I.
15:00
Speaker 6: So was the science in relation to equestrian stuff or
15:04
Speaker 6: was it.
15:04
Speaker 8: Like it was?
15:06
Speaker 10: It was I wanted to run the bar, not just
15:08
Speaker 10: train the horses, and so there was. And then I
15:10
Speaker 10: found I loved my business classes and I loved being
15:14
Speaker 10: based in the Midwest, because I do know who SOE.
15:17
Speaker 10: Robinson is, and I know who a lot of those
15:19
Speaker 10: other companies are there. Are you based in the mid
15:22
Speaker 10: based in Minneapolis, based in Minneapolis?
15:24
Speaker 11: Yes?
15:24
Speaker 4: Nice, Okay, what do we Okay, let's say we want
15:26
Speaker 4: to play infrastructure. Let's say some of those great Midwestern industries.
15:30
Speaker 3: How are you guys playing it? How are you getting
15:32
Speaker 3: exposure here?
15:33
Speaker 10: We've got and we've had an important uh specifically called
15:38
Speaker 10: out in an ETF and actively managed ETF pave Yeah
15:44
Speaker 10: like that, which is and then we actually another iteration
15:48
Speaker 10: is another actively managed ETF. The ai Q and X
15:52
Speaker 10: is one of the ways we've been doing it. There's
15:54
Speaker 10: a lot you can own the ETF, you can own
15:56
Speaker 10: the individual securities. We do have a lot of clients
15:59
Speaker 10: that own it individual securities. Lots of ways to play it.
16:02
Speaker 10: There's also the structure around it. One of the other
16:05
Speaker 10: things we're focusing on from a global standpoint is trying
16:08
Speaker 10: to get to even a neutral weight in Japan when
16:11
Speaker 10: most of the world is underweight, because when you look
16:13
Speaker 10: at the Japanese indexes, they're much more technology heavy than
16:16
Speaker 10: the European the other developed markets which are more industrial
16:21
Speaker 10: or utility or old schools. So there's lots of different
16:24
Speaker 10: ways to play it, both individually as well as just
16:27
Speaker 10: leaning into those those sectors.
16:30
Speaker 8: And so paved.
16:31
Speaker 6: If you look on your Bloomberg terminal, it is Eaten,
16:35
Speaker 6: it is parkerhannafin Rentals Emerson. I love these guys.
16:41
Speaker 10: Well, and when we were looking for a way to
16:43
Speaker 10: play it, we specifically searched out who are the ones
16:46
Speaker 10: that are going to be based on that rebuilding in
16:49
Speaker 10: the United States, And it's interesting. One of the it
16:53
Speaker 10: was watching h Robinson's Earnings actually where I first learned
16:56
Speaker 10: that Mexico is our biggest trading partner before the news
17:00
Speaker 10: was announcing it, because they were putting five hundred million
17:02
Speaker 10: dollar facility on this side of the border in Texas
17:05
Speaker 10: to help move that stuff.
17:08
Speaker 6: Something we have heard though in a lot of these
17:10
Speaker 6: conference calls. Is that there's no doubt a structural shift
17:14
Speaker 6: underway for these industrial guys as they take advantage of
17:17
Speaker 6: the Chips Act and the Infrastructure Act and in etc.
17:22
Speaker 6: But it's still a cyclical industry and so a lot
17:25
Speaker 6: of these companies wind up having say a strong backlog,
17:28
Speaker 6: but they're not like booking the orders right away, like
17:30
Speaker 6: they're not making the kind of money now that we
17:32
Speaker 6: thought they necessarily would. How do you think about.
17:35
Speaker 10: That, Well, I think it's important to you get that
17:38
Speaker 10: same sort of push and pull in the artificial intelligence
17:41
Speaker 10: because on the one hand, three years from now, we're
17:43
Speaker 10: going to be really happy that these big, deep pocketed
17:46
Speaker 10: companies are spending on infrastructure. But in the last earnings
17:50
Speaker 10: round we nailed some of them because they're spending on infrastructure.
17:53
Speaker 10: To put that in, so it is the advantage we
17:56
Speaker 10: have is that we're investing very long term money, and
18:00
Speaker 10: so part of it is managing the expectations in the
18:03
Speaker 10: short run with clients that you know, here's what we're
18:06
Speaker 10: building for the long run. We know it might be
18:09
Speaker 10: ballatle on the short run, and so will dollar cost
18:12
Speaker 10: average into some of these positions take advantage if they
18:14
Speaker 10: blow up on an earnings report or something like that,
18:18
Speaker 10: But it really is you have to stay out of
18:22
Speaker 10: the day to day frenzy, if you will, and focus.
18:25
Speaker 4: So at BIMO Family Office for those who don't know,
18:28
Speaker 4: Bemo's Bank of Montreal. So I'm guessing by the name
18:31
Speaker 4: you have a lot of Canadian clients.
18:33
Speaker 10: We actually we're the US of the Family Office and
18:38
Speaker 10: it was BIMO in the US has had Harris Bank
18:43
Speaker 10: from Chicago, so there's a lot of team mentioned.
18:46
Speaker 4: Is there a difference between risk tolerance for a Canadian
18:48
Speaker 4: investor versus a US vestor?
18:50
Speaker 3: Do you look at them differently? Stock spawns, alternatives, that
18:53
Speaker 3: kind of thing.
18:54
Speaker 10: Interesting question. Canada tends to be very resource based, as
18:59
Speaker 10: you can, and so there's a lot of emphasis there.
19:03
Speaker 10: There is a difference to in the individual space somewhat,
19:08
Speaker 10: but you know, it's no different than any couple that
19:12
Speaker 10: sits down across from US. There might be different risk
19:14
Speaker 10: tolerance there where one wants to be a longer term
19:16
Speaker 10: investor and one wants to trade on the lightest. Would
19:20
Speaker 10: you like energy looking for a friend? Yeah, Energy is
19:26
Speaker 10: definitely an interesting play and there's some of the you know,
19:29
Speaker 10: we've got really good energy and commodity analysis, where we've
19:34
Speaker 10: been having a lot of conversation for copper for a
19:37
Speaker 10: very long time about overcapacity under capacity. And it's hard
19:40
Speaker 10: because to your point earlier, they are cyclical industries. There's
19:43
Speaker 10: going to be those cyclical flows. But having cyclical operations
19:49
Speaker 10: inside a secular trend is more positive if that secular
19:53
Speaker 10: trend is bringing everybody up. So the backlogs are building.
19:56
Speaker 10: Energy is tough because it's politically charged for a lot
20:00
Speaker 10: of Where do they invest, do they get back to shareholders?
20:03
Speaker 10: How do they participate in the transition of the grid.
20:07
Speaker 3: So how about healthcare?
20:09
Speaker 4: I see that in your notes here you kind of
20:11
Speaker 4: highlight biotechnology, and I always said, well, biotechnology, that's a
20:14
Speaker 4: tough place because it feels like it's binary. It either
20:18
Speaker 4: passes in the stock goes ripping, or it doesn't pass
20:20
Speaker 4: and it goes to zero.
20:21
Speaker 3: How do you guys get exposure there?
20:23
Speaker 10: Well, I think over arkingly, biotechnology is interesting as are
20:30
Speaker 10: for the artificial intelligence implications that you've got in drug
20:34
Speaker 10: delivery and drug discovery and med tech discovery and things
20:38
Speaker 10: like that. There are again, actively managed or passively managed
20:42
Speaker 10: ETFs or ways to play it. We don't necessarily call
20:46
Speaker 10: it out as a secular theme in our portfolios, but
20:49
Speaker 10: healthcare in general, especially when you start thinking about the
20:52
Speaker 10: long term implications and the second and third knock on
20:54
Speaker 10: effects of the GLP one drugs in terms of do
21:00
Speaker 10: we need less diabetes drugs? Do we need fewer knat
21:02
Speaker 10: and plant replacements and surgery there as we move forward?
21:07
Speaker 10: So it's really fun to think about those long term trends.
21:10
Speaker 6: Really, yeah, that's it's great. It's like that you get
21:12
Speaker 6: the opportunity to think of all the derivatives that are
21:14
Speaker 6: going to come after, which is really really.
21:16
Speaker 5: Great, most importantly English or Western saddle Western?
21:20
Speaker 8: Okay, what's the is there a dividing line.
21:22
Speaker 10: Between There actually is four seats. There's hunt seat, saddle
21:25
Speaker 10: seat Western, and then dressage.
21:28
Speaker 1: Okay, so is one of.
21:30
Speaker 6: Them running backwards? Katie, Katie Grifell. They could you a
21:35
Speaker 6: whole equestrian podcasts. I've been on the horse like a
21:41
Speaker 6: couple of times. All I got, Carol, it was so
21:43
Speaker 6: great to see you. Thank you so much to come back.
21:45
Speaker 6: Really wonderful talking to your life a chief investment officer
21:48
Speaker 6: over at BEMO Family Office.
21:51
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
21:55
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21:59
Speaker 1: Right OUTO with Them Business Act. You can also listen
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22:09
Speaker 6: I'm Alex the alongside Paul Sweeney. This is Bloomberg Intelligence Radio.
22:13
Speaker 6: We bring you all the news you need to know
22:15
Speaker 6: with great insight from a Bloomberg Intelligence team that cover
22:17
Speaker 6: about two thousand companies and one hundred and thirty industries worldwide.
22:21
Speaker 6: We also do something really special on Bloomberg called the
22:24
Speaker 6: Big Take, and sort of daily we put out something
22:27
Speaker 6: that's really in depth, also very timely, with great reporting.
22:31
Speaker 6: And this Big Take also coincides with the lead in
22:34
Speaker 6: Bloomberg BusinessWeek, and it has to do with Intel committing
22:38
Speaker 6: some serious money into building a factory in Ohio. Joining
22:42
Speaker 6: us now is Max Chafkin. He's a senior reporter for
22:46
Speaker 6: Bloomberg BusinessWeek, and he co authored this piece with Ian
22:48
Speaker 6: King on Intel committing all of this money in Ohio.
22:51
Speaker 6: And you can read all of this at Bloomberg and
22:52
Speaker 6: on Bloomberg dot com slash Big Take. All Right, Max,
22:56
Speaker 6: what walk us through the piece, what it's about and
22:59
Speaker 6: what you learned.
23:00
Speaker 8: All right.
23:00
Speaker 11: So, Intel, you know, at one time was one of
23:03
Speaker 11: the world's largest companies. It is essentially the one of
23:06
Speaker 11: the founding parts of Silicon Valley.
23:09
Speaker 8: It's the reason it's called Silicon Valley in fact.
23:12
Speaker 11: But over the last decade, Intel has really suffered, you know,
23:16
Speaker 11: they've they've sort of fallen behind both the big chip
23:20
Speaker 11: makers in the US, Nvidia, a MD, and they've fallen
23:23
Speaker 11: way behind on manufacturing, behind TSMC and Samsung. And that's
23:28
Speaker 11: a big problem for Intel, this you know, large important
23:32
Speaker 11: American company, but of course it is also a problem
23:34
Speaker 11: for the United States because Intel at this point is
23:37
Speaker 11: the only company making state of the art ships or
23:39
Speaker 11: even trying to make state of the arch ships in
23:41
Speaker 11: the US. And over the last few years they've pursued
23:45
Speaker 11: basically a turnaround, and that turnaround is betting entirely on manufacturing.
23:50
Speaker 8: You mentioned the project in Ohio.
23:52
Speaker 11: President Bien has talked about that a fair number of times,
23:56
Speaker 11: including bringing it up in the State of the Union address.
23:58
Speaker 8: They're also major, you.
24:00
Speaker 11: Know, tens of billions of dollars projects in Arizona and Oregon.
24:04
Speaker 11: And this this these this work is being backed with
24:07
Speaker 11: a lot of money from Washington, uh nineteen point five
24:10
Speaker 11: billion in grants and loans from the Biden administration. So
24:13
Speaker 11: it's this big, ambitious attempt to turn around, you know,
24:17
Speaker 11: a really important company that's fallen on some hard times.
24:19
Speaker 11: It's also a big part of the White House's geopolitical strategy.
24:23
Speaker 4: They're gonna build a megafab. What is a megafab? And
24:27
Speaker 4: can they actually is there? Are they gonna get it
24:29
Speaker 4: done here? Because this is big numbers.
24:31
Speaker 11: Uh yeah, So the Intel's put twenty eight billion into
24:34
Speaker 11: this Ohio.
24:35
Speaker 8: Site so far.
24:36
Speaker 11: The site is it's about forty five minutes north of Columbus.
24:40
Speaker 8: You know, it's in a bunch of farmland. It's really muddy.
24:42
Speaker 11: You go there now and what you really see is
24:44
Speaker 11: just a ton of construction. What this The idea of
24:48
Speaker 11: a megafab would be to have multiple chip factories, each
24:52
Speaker 11: one of these things. You know, you're talking on the
24:55
Speaker 11: order of ten billion dollars. They're gonna build two to start,
24:58
Speaker 11: and it sounds like a crazy amount of money, but
25:01
Speaker 11: at this point, that is what you need if you
25:03
Speaker 11: want to be able to compete to make chips, say
25:05
Speaker 11: for the iPhone or for AI chips, you know, to
25:09
Speaker 11: try to compete with Nvidia, which Intel you know, really
25:12
Speaker 11: desperately would like to do, but it just isn't quite
25:15
Speaker 11: there yet.
25:15
Speaker 8: On the manufacturing side yet.
25:17
Speaker 6: We have heard though of a lot of companies announcing
25:20
Speaker 6: projects and manufacturing facilities that don't get done, or the
25:23
Speaker 6: timeline's pushed out, or it gets paired back.
25:25
Speaker 11: Where's inteling, Yeah, yeah, we saw this of course during
25:28
Speaker 11: the Trump administration. You know, there has been like a
25:30
Speaker 11: political shift over the last i'd say decade where there's
25:34
Speaker 11: a lot more enthusiasm both from Republicans and Democrats for
25:38
Speaker 11: sort of state backed industrial projects.
25:40
Speaker 8: Not all those have gone great.
25:42
Speaker 11: You know, I mentioned this story that one of the
25:44
Speaker 11: sites that Intel was looking at was this Wisconsin sight
25:47
Speaker 11: outside of Racine. People will remember that because Donald Trump
25:50
Speaker 11: called it the eighth Wonder of the World these eight
25:53
Speaker 11: or nine years ago talking about fox Con. You know,
25:56
Speaker 11: fox Hunt opened there, but it hasn't proven to be
25:59
Speaker 11: the job creator they on and there's there's a.
26:01
Speaker 8: Risk with this project as well.
26:02
Speaker 11: I will say these semiconductor factories, they are like some
26:07
Speaker 11: of the biggest and most ambitious kinds of factories you
26:10
Speaker 11: can build there are already. It's like I said, it's
26:13
Speaker 11: it's muddy. There's not a lot going on there right now,
26:15
Speaker 11: and there are already, you know, fourteen hundred construction workers
26:20
Speaker 11: working on that site today. Long run, they're saying it's
26:23
Speaker 11: going to employ something like seven thousand. And you hear that,
26:26
Speaker 11: you think, okay, seven thousand construction workers like that.
26:29
Speaker 8: That's not as a temporary job, not a full time job.
26:31
Speaker 11: But the thing is with these sites, construction could go
26:34
Speaker 11: on for decades.
26:35
Speaker 8: You know, it's conceivable if.
26:37
Speaker 11: They really built this thing out, that many of these
26:39
Speaker 11: construction workers could work like their entire career building these things.
26:43
Speaker 11: Because the nature of the business is you have to
26:45
Speaker 11: keep reinvesting and you have to keep building new fabs.
26:49
Speaker 11: And the way that you know, analysts and so on
26:51
Speaker 11: are looking at this industry, there's gonna be a lot
26:53
Speaker 11: more demand for chips, you know, in the coming decades.
26:56
Speaker 4: And avoid reading your story and in king story here,
27:00
Speaker 4: you know this is a great example or just certainly
27:02
Speaker 4: an expensive example of onshoing the money for Intel in Ohio.
27:06
Speaker 4: But then you guys also report twelve billion dollars for
27:09
Speaker 4: plant being built in Arizona by Taiwan. Semiconductor six billion
27:13
Speaker 4: dollars for one in Texas being built by South Korea
27:15
Speaker 4: Samsung Electronics. So the money and is coming into the
27:18
Speaker 4: US for to ensure this ship business.
27:21
Speaker 8: Yeah, I think this.
27:21
Speaker 11: May turn out to be, you know, a thing that
27:24
Speaker 11: people are talking about in the next few months as
27:26
Speaker 11: we get closer to November. You know, this has been
27:28
Speaker 11: a big part of the Biden administration's industrial policy. It
27:32
Speaker 11: has components of sort of a jobs program because like
27:34
Speaker 11: as I was saying, you know, these are construction sites,
27:37
Speaker 11: you know, potential good jobs for people. Even even in
27:40
Speaker 11: these plants which are run by robots, the people still
27:43
Speaker 11: work there. And the other thing you have is this
27:46
Speaker 11: kind of competition with China, and the Biden administration really seeing,
27:51
Speaker 11: you know, post COVID, post chips shortage that the United
27:55
Speaker 11: States needs to sort of be able to produce at
27:58
Speaker 11: least some of its own high end and chips because
28:00
Speaker 11: because right now that is not the case.
28:02
Speaker 8: Now.
28:03
Speaker 11: The interesting thing is that idea, the sort of China
28:06
Speaker 11: competition idea has devotees in both parties. You know, in Ohio,
28:10
Speaker 11: Ohio is a state dominated by Republicans. The Republicans have
28:13
Speaker 11: been touting this as well, however, you know, it's not
28:16
Speaker 11: clear if if Biden doesn't win, it's not totally clear
28:19
Speaker 11: like how things might change with Trump. But but right
28:22
Speaker 11: now it really seems like, you know, the US is
28:25
Speaker 11: all in on investing in chip factories. There's even talk
28:29
Speaker 11: of a second chip sack, you know, the idea that
28:31
Speaker 11: we might even appropriate more money for this stuff.
28:34
Speaker 6: Not to talk about energy, but let's talk about energy.
28:36
Speaker 6: How are they going to power these this kind of fab?
28:40
Speaker 11: Yeah, I mean that is a huge issue, and talking
28:42
Speaker 11: to Intel, that is like one of the main issues
28:46
Speaker 11: in terms of where where you're going to cite one
28:47
Speaker 11: of these things. So when you're talking about building a fab,
28:49
Speaker 11: you're talking about essentially you need a lot of space,
28:52
Speaker 11: you need energy, and you also need water. Semiconductors use
28:56
Speaker 11: tons and tons of water. Now, Intel, what they say
28:59
Speaker 11: is they are really mindful of their environmental stuff. They're
29:03
Speaker 11: you know, you know, all in on sustainability and so
29:05
Speaker 11: on a lot of the stuff that many companies say.
29:07
Speaker 8: Although I have to say, they.
29:09
Speaker 11: Are already recycling a huge amount of water at these plants,
29:13
Speaker 11: and and you know, for this industry to have a future,
29:15
Speaker 11: it does have to you know, continue you know improving
29:18
Speaker 11: on sustainability.
29:20
Speaker 3: Let me just put a plug in for this story.
29:21
Speaker 3: I'm reading it right now.
29:22
Speaker 4: First of all, great reporting, as always some Max and
29:25
Speaker 4: Ian Kig, but great like audio and graphics and stuff
29:28
Speaker 4: like that.
29:28
Speaker 3: It shows you. The audio shows I feel like a
29:30
Speaker 3: shop by a drone or something.
29:32
Speaker 4: It shows you how big this facility in Ohio.
29:36
Speaker 3: Is going to be. So it's great stuff.
29:37
Speaker 4: Check it out on Bloomberg dot com slash Big Take,
29:41
Speaker 4: or you can find it on the Bloomberg terminal. Max Chafkin,
29:44
Speaker 4: Senior Reporter Bloomberg BusinessWeek, joining us here in a Bloomberg
29:47
Speaker 4: Interactive Brooker Studio.
29:48
Speaker 3: Great great story.
29:49
Speaker 4: He and Ian King wrote on Intel that's twenty eight
29:53
Speaker 4: billion to make Ohio or, as Matt Miller would say,
29:56
Speaker 4: the great state of Ohio a global chips hub.
30:01
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
30:05
Speaker 1: weekdays at ten am Eastern on Apple car Play and
30:08
Speaker 1: Android Auto with the Bloomberg Business app. You can also
30:11
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30:15
Speaker 1: Just Say Alexa, playing Bloomberg eleven thirty.
30:20
Speaker 4: In our C Suite segment Today, a really unique story
30:22
Speaker 4: the company His name is Zoetis Health Animal Healthcare, and
30:26
Speaker 4: we talked about animal healthcare and therapeutics. We're talking in
30:30
Speaker 4: companion animals like dogs, cats, and horses, but also livestock, cattle, hogs,
30:36
Speaker 4: all that kind of good stuff. You got to get
30:37
Speaker 4: medicine to these animals.
30:39
Speaker 3: And Zoetis does it.
30:41
Speaker 4: Joining us today is Wetney Joseph, chief financial officer of
30:44
Speaker 4: Zoetis z ts is the ticker similar to load into
30:47
Speaker 4: your Bloomberg terminal. The good news is they're up seven
30:50
Speaker 4: percent today on some good earnings. Company's got a market
30:53
Speaker 4: kappas seventy seven point five billion dollars, so a significant
30:56
Speaker 4: global player in the world of healthcare for animals.
31:00
Speaker 3: Ny, thanks so much for joining us here.
31:02
Speaker 4: Just give us a little bit greater flavor about what
31:04
Speaker 4: you guys do a Zoetis. What's the story and what's
31:07
Speaker 4: kind of the growth outlook for you guys.
31:10
Speaker 9: Thanks for having me, Paul, great to be with you today. Yes,
31:13
Speaker 9: Zoetis is the leading animal health company in the world,
31:16
Speaker 9: and we lead our industry and innovation. Have demonstrate and
31:19
Speaker 9: ability through our diverse and durable portfolio of products as
31:24
Speaker 9: well as our market leading innovation to actually grow faster
31:28
Speaker 9: than the market. And as you described, we have a
31:31
Speaker 9: part of our business, which is about two thirds of
31:32
Speaker 9: our businesses really advancing care for pets, so cats and
31:38
Speaker 9: dogs and horses also are comparing animals. And then our
31:41
Speaker 9: livestock business is really production animals around the world. And
31:46
Speaker 9: we just delivered an outstanding quarter. We grew our top
31:49
Speaker 9: line twelve percent operationally and grew justin then income fifteen
31:53
Speaker 9: percent operation only on the back of this really resilient
31:57
Speaker 9: industry that we operate in and the innovation that we
32:01
Speaker 9: lead with.
32:02
Speaker 6: Typically people tend to say, hey, you know what, anything
32:05
Speaker 6: to do with pets is recession proof, right, because like
32:08
Speaker 6: I won't eat, but my pet will. Is that the
32:11
Speaker 6: same in your business?
32:12
Speaker 10: You laugh?
32:12
Speaker 3: But true, I know.
32:15
Speaker 9: You know ped owners would agree with you. Actually, we
32:18
Speaker 9: actually have survey after survey, and we see it in
32:21
Speaker 9: our numbers, in our results as well, but we have
32:23
Speaker 9: survey after survey that proves this, and about eighty six
32:26
Speaker 9: percent of pet owners in a very broad survey, indicated
32:30
Speaker 9: that they would spend whatever it takes if their pet
32:32
Speaker 9: needed extensive veterinary care. And we did a market study
32:35
Speaker 9: also where we gave a hypothetical to pet owners and
32:37
Speaker 9: we said, look, if you had a twenty percent reduction
32:41
Speaker 9: in your budget, what would that do to how much
32:43
Speaker 9: you spend on your pet health? And the answer is nothing,
32:45
Speaker 9: They would not reduce it. So ped owners at large
32:48
Speaker 9: see this. And you know, I've been in the industry
32:50
Speaker 9: now for about three years and what's been really interesting
32:53
Speaker 9: is this is not just a phenomenon in the US
32:55
Speaker 9: or in European markets. We see it across emerging markets
32:58
Speaker 9: as well, So it's really phenomenal.
33:00
Speaker 4: So I'm looking at Wall Street forecasts on the Bloomberg
33:03
Speaker 4: terminal here for your company. Look, that's six to seven
33:05
Speaker 4: percent revenue growth in each of the next three four years.
33:08
Speaker 4: What are the components of the top line revenue growth
33:11
Speaker 4: for your company?
33:13
Speaker 9: Yeah, Look, we have really multiple sources of growth. We
33:16
Speaker 9: have our companion animal portfolio he continues to grow, which
33:19
Speaker 9: are innovative products like we do in dermatology. So our
33:22
Speaker 9: key DRM franchise is actually one point four billion dollars
33:27
Speaker 9: and we essentially really shaped that market over the last decade.
33:32
Speaker 9: We have parasiticized which is the biggest segment of the market.
33:35
Speaker 9: It's north of six billion dollars in terms of market
33:38
Speaker 9: and that segment is really growing for US, and we
33:41
Speaker 9: are the market leader in terms of triple combination products
33:45
Speaker 9: that tackle flee sticks and heartworm, and we posted growth
33:48
Speaker 9: in that segment today, really outstanding growth, including our Trio
33:52
Speaker 9: product which was sixty one percent. And so those two
33:55
Speaker 9: areas are two billion dollar franchises that we have and
33:58
Speaker 9: the third billion dollars for franchise that we are launching.
34:02
Speaker 9: We launched actually three years ago in Europe and just
34:05
Speaker 9: recently launched in the US is Austria. Threat Is Pain,
34:08
Speaker 9: which we believe is a market that is poised for
34:13
Speaker 9: our innovation that we've launched, and we believe those products,
34:16
Speaker 9: both for cats and dogs, will be north of a
34:18
Speaker 9: billion dollars in peak sales for US, which is essentially
34:21
Speaker 9: within the first three to five years after launch. And
34:24
Speaker 9: in that segment also we saw tremendous growth in this quarter.
34:29
Speaker 6: What's competition like, who are your main competitors?
34:33
Speaker 9: So our main competitors are other animal health companies. So
34:36
Speaker 9: for example, borringeror Engelheim is a private company that has
34:41
Speaker 9: human health as well as animal health business. Mirk Animal
34:45
Speaker 9: Health is another one that I'm sure all of you
34:47
Speaker 9: a very familiar with they have an animal health business
34:50
Speaker 9: as well, and then in Lanco is also a publicly
34:53
Speaker 9: traded company that has animal health offerings. We are the
34:59
Speaker 9: largest among our competitors, and we also lead with innovation
35:03
Speaker 9: in terms of the products that we come out with.
35:05
Speaker 9: I mentioned dermatology for example. I just mentioned au seria,
35:08
Speaker 9: thrise pain. These are areas of significant unmet need that
35:11
Speaker 9: we really take our purpose driven colleagues and our capabilities
35:16
Speaker 9: around innovation to really look for meaningful innovation that changes
35:21
Speaker 9: the standard of care for animals, and we tend to
35:23
Speaker 9: lead and be first in market and that tends to
35:26
Speaker 9: drive the rest of our industry as well. So those
35:28
Speaker 9: are the main competitors that we have, but we're by far,
35:32
Speaker 9: you know, the leader in terms of innovation in our space.
35:34
Speaker 4: And Alex you'll be happy to know that this is
35:36
Speaker 4: another New Jersey success story.
35:38
Speaker 3: Parsipony, New Jersey. How about that, Wetney.
35:41
Speaker 4: I look at your business, Well, you guys are truly global.
35:44
Speaker 4: Forty five about fifty three percent of your revenue comes
35:48
Speaker 4: the US and about you know, I don't know, forty
35:50
Speaker 4: five forty six percent comes international. Talk to us about
35:54
Speaker 4: the growth outlook for the US versus non US.
35:58
Speaker 9: So we actually see really great balance growth across our business.
36:03
Speaker 9: We are in one hundred countries. So if you look
36:05
Speaker 9: at our international segment, for example, it grew eight percent
36:08
Speaker 9: operationally in the quarter, while the US led the way,
36:13
Speaker 9: particularly with Companion Animal growing globally twenty percent. The US
36:16
Speaker 9: grew about sixteen percent on the quarter, but we saw
36:20
Speaker 9: eight percent growth in our international segment as well. So
36:24
Speaker 9: as we look out, if you look at the market globally,
36:28
Speaker 9: we are in Brazil, We're in Australia, We're in China,
36:34
Speaker 9: We're of course across Europe, and so very very global
36:38
Speaker 9: in nature, and we are introducing our innovation across all
36:41
Speaker 9: of those markets, so that tends to drive it. And
36:45
Speaker 9: really the US is our largest as you mentioned, fifty
36:48
Speaker 9: three percent, tends to be a little bit more Companion
36:50
Speaker 9: Animal heavy. So the US is about seventy five percent
36:53
Speaker 9: Companion Animal, give or take, whereas Companion Animal globally is
36:57
Speaker 9: about two thirds of the company with the other third
36:59
Speaker 9: being production animals. Outside the US, it tends to be
37:02
Speaker 9: almost balanced. So a little bit, I would say, Companion
37:04
Speaker 9: Animal is just slightly over fifty percent, with the recing
37:07
Speaker 9: being live stock and we do see growth across our
37:10
Speaker 9: emerging markets as well. And we're also in a lot
37:12
Speaker 9: of different species, so I talk about companion animal across
37:15
Speaker 9: live stock. We are of course in cattle, we're in poultry,
37:19
Speaker 9: we're in swine. When aqua also fish, particularly in markets
37:23
Speaker 9: like Chile and Norway, et cetera.
37:25
Speaker 4: I didn't even think about it. I mean, yeah, great stuff,
37:27
Speaker 4: Wetney Joseph, great story. Thanks for taking the time to
37:29
Speaker 4: joining us, Wetney Joseph. He's a chief and anfangel officer.
37:32
Speaker 4: Zoatist is the name of the company located in Parsippany,
37:36
Speaker 4: New Jersey.
37:37
Speaker 3: Fascinating story. Seventy five billion dollar market cap.
37:39
Speaker 4: I mean it's a huge company, you know, about eight
37:42
Speaker 4: and a half billion dollars in revenue. It's one of
37:43
Speaker 4: those companies you never heard of until you're like, oh, yeah,
37:47
Speaker 4: I mean there's got to be somebody doing this stuff. Yeah,
37:49
Speaker 4: you know, and sure enough there is. And it's a
37:52
Speaker 4: totally truly a global business.
37:53
Speaker 6: Well, especially as we need more protein to feed the
37:56
Speaker 6: rest of the world, as the world keeps growing, right,
37:58
Speaker 6: and it won't all be like in poss Burgers. You
38:00
Speaker 6: actually need the fish, you need the cows. You need
38:03
Speaker 6: the pigs, like, how do you keep them healthy? How
38:05
Speaker 6: do you advance that? So we're not running on any
38:07
Speaker 6: kind of shortage. I thought it was very interesting.
38:09
Speaker 3: Also, total ecosystem play there pet.
38:12
Speaker 6: Do you have a pet?
38:13
Speaker 3: No, never had a pet?
38:14
Speaker 6: I can see that about that.
38:15
Speaker 3: Yeah, I know, I can.
38:16
Speaker 6: I tell you you get four kids though, so there's
38:18
Speaker 6: off set of down.
38:19
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