April 24, 2025 • 44 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump said his administration was talking with China on trade, after Beijing denied the existence of negotiations on a deal and demanded the US revoke all unilateral tariffs.
“They had a meeting this morning,” Trump said Thursday during a meeting with Norway’s prime minister when a reporter asked about the Chinese statement.
Pressed on which administration officials were involved in discussions, the US president said, “it doesn’t matter who ‘they’ is. We may reveal it later, but they had meetings this morning, and we’ve been meeting with China.”
The exchange exposed the ongoing disconnect between Washington and Beijing, as President Xi Jinping’s government maintains a defiant stance despite Trump’s recent suggestion he could lower tariffs on China.
Separately, the US will demand that Russia accept Ukraine’s right to develop its own, adequately equipped, army and defense industry as part of a peace agreement, according to people familiar with the matter, pushing back on Russia’s insistence that the country largely demilitarize as a condition to end the war.
Meanwhile Google parent Alphabet and Intel reported quarterly earnings after the close of US trading Thursday.
Alphabet reported first-quarter revenue and profit that exceeded analysts’ expectations, buoyed by continued strength in its search advertising business.
First-quarter sales, excluding partner payouts, were $76.5 billion, the company said Thursday in a statement. Analysts had expected $75.4 billion on average, according to data compiled by Bloomberg. Net income was $2.81 per share, compared with Wall Street’s estimate of $2.01.
Alphabet needs to ensure momentum in its internet search advertising and cloud businesses in order to justify its heightened investment in the artificial intelligence race. Competition is prompting the company and its rivals to spend heavily on infrastructure, research and talent. While Google benefits from AI startups spending on its cloud and business tools, it’s also racing to present an answer to popular conversational AI chatbots, which consumers are beginning to think of as an alternative to using Google Search.
Intel Corp., the chipmaker attempting a comeback under new Chief Executive Officer Lip-Bu Tan, gave a weak forecast for the current period and said it’s cutting workers to bring costs in line with the business’s smaller size.
Second-quarter revenue will be between $11.2 billion and $12.4 billion, the company said in a statement Thursday. That was well short of the $12.9 billion average analyst estimate.
The cost-cutting plan will involve “eliminating management layers” to enable it to make faster decisions, Intel said. The company doesn’t yet have an estimate for the one-time expenses associated with the cuts, but expects operating costs to be reduced to about $17 billion this year and $16 billion in 2026. Bloomberg News reported this week that Intel is planning to slash its employee ranks by more than 20%.
- Today's show features:
Ed Price, Senior Fellow (non-resident) at New York University and Former British Trade Official - Sheila Kahyaoglu, Jefferies Managing Director in Equity Research
- Mark Douglas, MNTN President and CEO and Mandeep Singh, Bloomberg Intelligence Senior Tech Industry Analyst, on Alphabet earnings
- Ed Ludlow, Bloomberg Technology Co-Host, on Intel earnings
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:08):
This is Bloomberg business Week, Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business finance
and tech news as it happens. The Bloomberg Business Week
Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 3 (00:32):
We have a great guest, someone we turn too often
when it comes to some of the big issues that
are facing global relationships. Back with us, as Ed Price.
He's a former British trade official. He's now nonresident Senior
Fellow at New York University's advised members of the European
and British parliaments. He's a former British trade official, and
he writes often about politics, economic policy, and so much more.
(00:54):
And he joins us now from upstate New York. Good
to have you here. How are you?
Speaker 4 (01:00):
I'm well, Carol, thanks again for having me.
Speaker 3 (01:02):
How are you doing well? Trying to keep up and
certainly taking our cues out of the White House and
specifically just moments ago from the Oval Office. Let's start
with I think what is top of mind? And it
seemed to be top of mind for the discussion between
the Prime Minister of Norway and President Trump just moments ago,
and that is Russia Ukraine. US is expected to demand
(01:24):
that Russia accept Ukraine's right to have its own army
defense industry as part of a peace agreement between Moscow
and Kiev. And Kiev, how do you see these developments
and where it might be going and in what might
bring this to an end, if anytime soon?
Speaker 4 (01:41):
Sure, So I'm very puzzled about the situation in Ukraine, honestly,
because it seems to me from the outside that Putin
has been slowly losing this war, and slowly losing this war,
at least against his initial ambitions, which as we know,
included the seizure of all of Ukraine and the installation
of a puppet government. And so you go away and
read about this, ask people that better informed than I,
(02:03):
maybe who travel more frequently over there. They'll tell you
that Putin is doing pretty poorly and that the Russian
economy is not in the sort of place that could
continue this war for long. And so when I see
President Trump announce that he's going to come up with
a deal, I don't understand why he doesn't push forward
with more weapons and more supplies to Ukraine in order
(02:25):
to push that deal forward, whatever it is. So it's
very confusing because on the one hand, Trump seems to
offer carrots to Putin, carrots that Putin hasn't asked for
while withdrawing the stick. I haven't actually read the art
of the deal. That might be how you're supposed to
do it, but I'm not sure well, and.
Speaker 5 (02:40):
It does to be fair to the president, something that
he has been consistent about is the disdain that he
has for the loss of life, and it's something that
he mentioned several times today talking about the thousands of
young people who continue to die in Ukraine each and
every week as a result of this war. Could it
be in your view that he just wants to end
the fighting.
Speaker 4 (03:02):
He may want to end the fighting, but I'm not
sure that the same man who threatens Greenland, Panama and
Canada with possible military action truly cares about the loss
of life. So I would put that down to a
nice talking point that he does well to repeat because
it's a powerful one, and I should be careful myself
as an analyst not to enjoy or celebrate wars, and
we talk about this one in Ukraine very often. It
(03:24):
is indeed tragic. Now that might be cynicism. I don't
look at President Trump at his entire policy agenda, his
entire foreign policy agenda, and think this is someone who
cares about lives. Need I remind the people watching or
listening to this live stream that we've also been sending
people without due process to El Salvador. So I would
(03:46):
certainly take President Trump's concern for human rights or the
loss of life with a pinch of salt.
Speaker 3 (03:51):
The other thing is that the President has certainly talked
a lot about and to be fair, it's and is
maybe his quest and his mission to make sure that
the US has what it needs for national security. And
I think it's safe to say that a lot of
nations are thinking about this at this point. He talked
about Greenland important for international peace. You've been traveling ed.
You've been not necessarily to Greenland anytime soon, but you
(04:15):
have been to Panama, You've been to Canada. I am
curious what you've been hearing seeing when it comes to
maybe a new global order.
Speaker 4 (04:25):
Well, if there's a Bloomberg challenge for me to go
to Greenland. I accept, and I'll put back. We'll work
on it. Canada and Panama are in the same mood,
and when an American citizen turns up and says, look,
what do you think? The answer is not much. Both
of those countries are very upset with the idea that
the United States, the apparent champion of liberty and it's
(04:47):
two hundred and forty nine year history, would be threatening
the annexation of allies. It's completely bizarre, and it's also
something that I think is causing quite a lot of stress.
Speaker 6 (04:59):
Now.
Speaker 4 (04:59):
The Canadians and the people in Panama were very polite
to me. That might be because they were misled by
my accent and they, you know, they thought I was British.
But as soon as I said, look, I'm actually American
in a hotel lobby or even at the checkpoint, there
were raised eyebrows. So we always talk about whether Trump
is serious in his foreign policy script. I don't know
if he is or not. I think is, but other
(05:20):
people abroad do.
Speaker 5 (05:23):
Do you think there's a legitimate argument for the United
States to want to annex Greenland?
Speaker 4 (05:30):
No?
Speaker 7 (05:30):
I from a security perspective, ed, No.
Speaker 4 (05:33):
It's completely insane. Because whatever the gain in annex in Greenland,
there would be a loss in the EU as an ally.
And you know, you could never fully sit down with
the eyes and ears of God and calculate what that
net calculation would be. But I'm pretty sure you could
take a rough estimate and say, okay, we expand our
(05:53):
presence in Greenland, we formally change the deed, we say
we own it, and we put a few more troops
in there. Just imagine how annoyed and disgusted Denmark, France
and other EU countries would be with US. I mean
they could turn around and say, well, look, if the
United States is actually willing to cross frontiers and take
land that doesn't belong to them, maybe a deal with Beijing,
(06:15):
which to be fair to the Chinese, you know they
haven't actually done that. Maybe a deal with China is
in our interests long term. So I think it's there's
absolutely no argument for it when you sit down and
do the next calculation. If you have a simple view
of the world and you think this is mine, that's theirs,
then you of course, like we said before, you can
draw a sharpie around an area and say it's mine.
But I don't think that that's taking into account the
(06:37):
second order effect of losing the Europeans.
Speaker 5 (06:39):
Well, just a reminder of what the President said last
month in an address to Congress, quote, we need Greenland
for national security and even international security, and we're working
with everybody involved to try to get it. One way
or the other, We're going to get it.
Speaker 6 (06:52):
You know.
Speaker 3 (06:52):
One of the things I think about ED two as
we are watching kind of the back and forth between
world leaders, I guess what I'm most obsessed with is
US and China, just because they are the two big
economies and determine and control. I think it's safe to
say so much. Having said that, what is you know,
the strategic balance as China is not that China. It
(07:12):
was five years ago or ten years ago that maybe
needed an a SIST or twenty years ago, right when
so many different global companies set up shop there. We've
been talking a lot about the EV market and BYD
and the advancements that China has made technologically in this world.
And they have done this largely by supporting so many
(07:32):
of their industries and helping them develop. So I do wonder.
We had the Whirlpool CEO on yesterday, who manufactures about
eighty percent here in the United States. Eighty percent of
their supply chain is here, and is someone I would
say safe to say supportive of some of the terraff
pushback to help him develop his domestics.
Speaker 5 (07:50):
He's already got the domestic production, so he's in a
good position.
Speaker 3 (07:54):
It's in a good position. So what is like as
you talk to world leaders as you travel you know
some of the argument many would say that Trump has
makes some sense in terms of developing some industries here,
protecting our national security. What is the balance for any
nation US, China or the Europe region to have that
and yet kind of get along on a global basis,
(08:17):
which is necessary for things like climate change, the environment,
and so much more.
Speaker 4 (08:24):
Well, let's go through the exercise, Carol, and let's be
fair to President Trump. I think that he deserves an
A plus on his report cards for identifying global problems.
This is the man that's identified that the Breton Woods
trade imbalance, that is that other countries have a higher
tariff rate than the US. He's the man that identified
(08:45):
that that's out of date, and he joined the dots
between that and an unsustainable fiscal position in the United States.
He's also right to be fair to the president to
point out that great power politics and great power behavior
is a feature, not a of history, and that the
United States should be ready at some point in the
twenty first century for conflict. So the president, from you know,
(09:06):
some analyst like me, gets an A plus on identifying
the problems. Where we run into trouble is the execution
and the suggestion that Donald Trump, alone, in his sort
of chaotic ad hoc behavior, is helpfully moving the United States,
its allies, and the world back into a new, more
helpful equilibrium. So I don't think that that's what he's doing. Yes,
(09:30):
the United States cannot continue to borrow the way it's
borrowing and subsidize the world's security. But the way to
fix that is to keep our allies closer, is to
do trade deals with the people that like us, and
maybe even reduce tariffs with them. So he has to
get what A D A D minus. You know, I
don't want to fail the guy out right, because he's
(09:50):
the President of the United States and his success is
everybody's success. But this sort of right, this chaotic approach
to things, is not going to bring the world into
so far as I can see, any new equilibrium, despite
what Scott Besson and Marco Rubio tried to do. After
Trump has spoken which is toned up in the press
and say actually this is what he really meant.
Speaker 3 (10:09):
Yeah, it's why folks like David Brooks of The New
York Times has said, you know, the President is maybe
the wrong answer to the right question, because I think
many would say, whether it's tariffs or geopolitics or positions
in the world, that he's brought up a lot of
issues that need to be dealt with and discussed ed.
We apologize things have gotten a little hectic today and
obviously we had to listen to President Trump there at
(10:31):
the White House. But we hope we can get you
back real soon. Really appreciate you weighing it. Ed Price
always timely, senior fellow at NY You non resident senior fellow,
former British trade official, joining us once again here on Bloomberg.
Speaker 2 (10:45):
You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 3 (10:59):
All right, folks, we've been watching some of the airlines.
I feel like we've been watching them for a few
weeks at this point. But we did have American come
out withdrawing its full year earnings out look, joining a
growing number of companies that say unease about the US economies,
making it difficult to forecast how the year will play at.
You also had Alaska Air saying second quarter earnings will
come in below Wall Street estimates, and then Southwest Air
(11:21):
raining and growth this year as volatility surrounding US trade
policy is chilling out consumer demand on air travel. I'm
just hoping fares come down. But we are watching this sector.
We've got a great voice to talk about it.
Speaker 5 (11:32):
Yeah, it's great to add back with someone who knows
the industry so well. Sheila Kaiaalu's here. She's managing director
and equity research at Jeffrey. She joins us here in
the studio. How bad is it for airlines right now?
Speaker 1 (11:43):
It seems like it's stabilizing. It was pretty bad a
month ago, and it.
Speaker 7 (11:46):
Was when we yea heard from Delta with drawing.
Speaker 1 (11:48):
Yes, Delta with drawing. We downgraded the sector to half
cell ratings and underperform ratings. But that news the sort
of price.
Speaker 8 (11:54):
Dan.
Speaker 1 (11:54):
That's why you're seeing American and Southwest kind of tread
water today because we've seen this tape before with domestic
leisure really being the soft spot off peak hours Tuesday Wednesday,
Blying really not getting passenger demand. Southwest putting up seventy
three percent load factors. That means the plane is about
three forts full, should be eighty two to eighty five
percent full. So we've seen that that's where the maronment that's.
Speaker 3 (12:18):
More than three percent. I was kind of shocked when
I went to look at what the price was. I thought, Okay,
it's going to be selling off. But you're saying most
of that stuff is it's starting.
Speaker 1 (12:25):
To get its chriced in because we've heard it now
for a month and it seems like the consumers able
to hold stable. But we also have a pause on tariff,
so let's see how that works itself out. We heard
from Boeing this week, we heard from General Electric and Raytheon.
These are aftermarket suppliers on engines, et cetera, and so
what they're doing is they're cutting their departure forecast from
(12:45):
mid single digit to low single digit. That means the
numbers of planes that are taking off, but that's based
on what's already happened with Delta and United cutting capacity
and even Southwest cutting mildly, and they're not really seeing
further weakness internationally. That's what we're hearing. That the market's
holding stable over the last six to eight weeks from
(13:06):
the fall off we saw starting March first.
Speaker 7 (13:07):
So how's business travel?
Speaker 1 (13:09):
Corporate travel seems like it's okay, but it depends on
the sector in the airline. You know, Southwest was a
little bit more robust. American has a very idiosyncratic story
because they removed their corporate booking channels last year, so
they have a super easy comp United and Delta called
out weakness obviously across government customers and certain manufacturing markets
(13:31):
like autos and even aerospace where they saw softness, but
financials tech was still holding up.
Speaker 3 (13:36):
So we'll see not a great reveal, but we've got
like two, three, four trips going out to the West
Coast in like the next month or so.
Speaker 5 (13:44):
Yeah, and we've booked zero tickets at this point. That's
fun to do.
Speaker 3 (13:48):
I have one booked, I have one book So what
are the airlines doing in terms of pricing? I know,
somebody else who was looking for a flight and saying, well,
wait are there's some softness and it was so expensive.
I think you go to Puerto Rico or something like
a hearing in terms of pricing.
Speaker 1 (14:00):
Well, I haven't checked out Puerto Rico flights. I wish
I would, but I met it's a Brazil and Paris
and a Dallas trip coming up, and none of them
are book yet. You know, folks post pandemic are booking
closer in and so you don't have flights book neither
do I. We haven't seen that price. I haven't seen
the pricing softness. No, but the airlines are calling it out,
especially in that domestic leisure market. So if we were
(14:22):
going to Florida and May, we'd probably get a discount
a ticket, or you know, Southwest called out that route
from Tucson to Albany. I'd like to know the guy
doing that route.
Speaker 3 (14:32):
But that's where they're seeing that weakness. I love you
and Tucson in Albany that we're just going to say, yeah.
Speaker 5 (14:38):
Yeah, I do wonder about just really what's happening when
you think about demand from the perspective of international travel.
You said that it's kind of holding up. But at
the same time, we're hearing reports that travelers coming to
the US from outside of the US are holding off,
and we're seeing that fall a little bit. Is that
showing up yet in results or in bookings, especially for
(15:00):
the summer?
Speaker 1 (15:01):
It seemed like for now international still holding up, especially
with europe strength there. We heard some rumblings about Canadian weakness.
Folks have sort of put an end to that, saying
it's only down ten percent, not the significant numbers we've seen.
So ten percent is something, it's significant, but we were
seeing numbers in the realm of seventy percent, so the
(15:22):
ten percent definitely scaled it back. So Canada is an
area we've heard weakness. We saw some European airlines call
out weakness coming into the US versus US originated flights
to Europe are still holding out pretty well, which is interesting.
Speaker 3 (15:36):
Yeah, I'm kind of surprised because I do feel like
there's some headlines on stories that are like, oh my god,
nobody's coming in, you know, traveling to the US and
or you know, even traveling elsewhere. Can we talk a
little bit about Boeing, Sure, tell me you're thinking, you know,
you cover the company. They've reported first quarter results exceeded
Wall Street estimates. You know they've done a deal, right,
(15:57):
getting rid of their flight navigation unity. What's how are
you thinking about next six twelve months for Boeing or
even longer term.
Speaker 1 (16:04):
I love Boeing when folks get negative, so the days
when it hits one forty, when we hear about people
canceling airplanes or thoughts of that. But you know, Kelly Orper,
yesterday the Bowing CEO said there's no change in the skyline.
Folks are waiting six years for the aircraft. They've been
waiting since twenty nineteen. Right Southwest is still waiting. We're
all waiting for airplanes to be delivered. No one's moving
(16:25):
out of line. The only customer who is is China.
Speaker 3 (16:28):
But they've been reducing for a while.
Speaker 1 (16:30):
China's been reducing. They've been about twenty percent of deliveries.
They're actually only five to seven percent of the official backlog,
but Chinese operators use undisclosed, So yesterday we know that
it's about fifteen percent of deliveries this year. In the
first quarter, Boeing delivered eighteen aircraft to China. They expect
another fifty for the full year, and our estimates are
around four hundred and seventy five. So China is a
(16:52):
risk and probably why Boeing didn't sound a little bit
more bullish. But they seem like things are working well
with the ramp on the three seven and all the
rest of the skyline.
Speaker 5 (17:00):
The President sending a message on his social media platform
this morning about Boeing, saying, quote, Boeing should default China
for not taking the beautifully finished planes that China committed
to purchase. This is just a small example of what
China has done to the USA for years, the Washington
involvement with Boeing, for better or for worse. I mean,
there's been a lot of criticism too, come from the
President about the new version of Air Force one, the
(17:22):
seven forty seven. Ken Boeing just sell those planes to
other countries because there is such a backlog if China
were to dry up.
Speaker 1 (17:31):
I think there was a headline about an hour ago
saying Air India might buy those Chinese planes. So here's
a note we put out three weeks ago. It was
called how many planes does it take to get to
the bottom of the trade deficit? When you think about
aerospace and defense. It is the only manufacturing center with
a sector with a sixty two billion dollar surplus. So
what can you buy if you have a trade deficit
(17:51):
that costs seventy million or four hundred million an airplane?
It's easily trackable. So we did a note where we
looked at every one point of reduction to the Chinese
US deficode, which is two hundred and finety five billion
is about fifty plans. So obviously it would take a
lot of planes from China.
Speaker 3 (18:05):
To offset it.
Speaker 1 (18:06):
But it's a good chip President Trump could put on
the table for folks.
Speaker 3 (18:10):
All right, on your radar for Boeing last twenty seconds,
just watch what.
Speaker 1 (18:15):
Free cash flow and max production. That's all that matters.
Speaker 3 (18:18):
All right, great stuff, Thank you so much, sheille I
really appreciate it. She's managing director and equity research over
at Jeffreys, joining us here in studio.
Speaker 2 (18:27):
This is the Bloomberg Business Week Podcast. Listen live each
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Speaker 5 (18:45):
Three point eight percent of the upside is where we
see shares of Alphabet, the parent company of Google. The
company reported first quarter revenue and profit that exceeded analysts expectations.
It was bullied by continued strength in its search advertising business.
And that's exactly where we want to go.
Speaker 6 (19:00):
Now.
Speaker 5 (19:00):
We've got back with us Mark Douglas. He's president and
CEO of Mountain. The company is software that helps companies
target advertising on smart TVs. He understands the ad spend market.
He joins us from Miami. Mark, good to talk with
you again. Does this surprise you given the trends that
you're seeing when it comes to advertising?
Speaker 6 (19:19):
Not given the trends I think the trends for I
want to talk more specifically about Google.
Speaker 7 (19:26):
Yeah.
Speaker 6 (19:26):
I think we started the you know, we started the
year and I think everyone literally everyone was very optimistic
about the economy, you know, Q one and Google's reporting
on those results, I think they did very well. I
think there were concerns and continue to be concerns about
whether AI on their platform, meaning in your search results,
(19:48):
is going in some way negatively impact the search business.
But I think as an investment even there just provide
some comment on that. Look, I'd rather have Google competing
with themselves than allowing other people to compete with them.
So I think even that's a positive if in the
future it does have some you know, negative impact.
Speaker 3 (20:04):
Well, you know, it's funny that you say that, you know,
and I'm looking at our right through by our Davy Alba.
But this whole idea that you know, alphabet, Google has
to show right that it still has momentum and search,
advertising and cloud, but at the same time show that
it's as it makes incredible investments in the AI build out,
(20:25):
as the world kind of shifts in that direction, that
it's also there as well. It's really tricky, and this
is what our man Deep Singh said. You know, this
is a company that's got seven apps with over i
think two billion monthly active users. It's bread and butter
is still Google, right, and it's search business. But as
people move to chat, Gibt or Gemini like, that's a
(20:47):
tough transition. It's got to juggle a lot.
Speaker 6 (20:50):
Yeah, and then like I said, I think if I'm
an investor in Google, the I always say to my company,
better we compete with ourselves than we allow someone else
to do it. So if I'm an investor, what I'm
looking for is that the management team is awake, they're alert,
and they're ready to compete. And I think Google's showing
that and what they're doing with Gemini, and they're showing
(21:13):
that they can still navigate search also with a company
with that scale. You mentioned the tremendous scale they have. Honestly,
you can find you can always squeeze out more revenue
and as a result, more earnings. So I think it
also shows that they can manage the business in order
to find those extra dollars if they need to, while
they might be challenged in other areas.
Speaker 5 (21:35):
Is this the classic innovator's dilemma? Though Google's core search
business is so profitable and it's so entrenched, and it's
so ingrained and pretty much almost every country in the world,
you have to say almost that there is a concern
that it doesn't want to cannibalize that with investment in Gemini.
Speaker 6 (21:57):
Yeah, that's what you don't want to see what you
want them to be like, like you almost wanted to
be two separate companies, and they just go at it
and made the best you know, part of Google win.
Speaker 3 (22:11):
The other thing they wanted to Google wins. That's the point, right,
Like you said, you like to be competing with yourself
forgive me go ahead.
Speaker 4 (22:18):
No exactly.
Speaker 6 (22:19):
The other thing to remember, you know, mobile was a
big threat to Google. Yeah, like like Google was all
desktop and you have your browser out. That's still you know,
obviously a huge part of their business. And people were
very worried about whether, you know, people were going to
search on mobile and if they did, whether they were
going to respond to the ad. So, I mean, it's
not the first time Google has been challenged by new
(22:41):
technologies and they you know, honestly kudos to them, because
I expected Gemini to to possibly cause some problems in
Q one and the yeah, in terms of their revenue,
and obviously it hasn't.
Speaker 3 (22:56):
Hey, one last question on the upcoming call with analysts,
what do you what would you be asking?
Speaker 6 (23:02):
What do you want to hear the I would be
all about Gemini and how AI results at the top
of the search page, which essentially I have replaced the
paid you know, the click ads, the paid ads at
the top of the search page for a lot of
the searches. I would want to ask every possible question
(23:24):
I can on data related to how that's impacting this
that their search revenue. There's search results, responses to the searches, everything,
and try, if I'm an analyst, try to model that out.
Speaker 3 (23:35):
All right, we're talking, of course with Mark Douglas, president
and CEO of Mountain. We want to bring into the
conversation Man Deep. Seeing he is senior tech industry analyst
at Bloomberg Intelligence, just coming in the studio. It's a
little crazy, so he hasn't heard everything that Mark had
to say. But Mark said, you know, he's curious about
Gemini is something he's going to be looking out on
(23:55):
the call. Man Deep, you told us, you told us
what to do. Man dprrect you NonStop because you said
it's all about search. So walk us through what they
got in and how it how it's sees, how it
looks for you because investors like it.
Speaker 8 (24:08):
Yeah, I mean the Google Services revenue was a slight beat,
but what was really impressive was the margin beat on
the Google Services.
Speaker 6 (24:17):
And a lot of.
Speaker 8 (24:18):
It is because everyone thought, because they're adding AI overviews,
that's going to hurt the margins of search.
Speaker 4 (24:25):
Oh it didn't happen.
Speaker 7 (24:27):
Why didn't Why didn't that happen?
Speaker 5 (24:28):
What's because you have to explain this from the perspective
of a Google user, like the experience, if we get
the if we get the answer with the AI overview,
we're not looking at ads, We're not clicking on things.
Speaker 7 (24:37):
Yeah, why doesn't it hurt?
Speaker 8 (24:39):
Because they have so many different types of queries on
Google Search that some of those queries they are able
to monetize it just through ads on AI overviews. Remember,
Google never went away from ads, even though they integrated elements.
Ads has always been a core part of of the
(25:00):
Google dot Com offering, even with the AI overviews, and
they somehow weave the ads in a way where they're
able to charge for those ads. That's what makes them
so special.
Speaker 7 (25:11):
I can't I never look at an AD on like
what is wrong?
Speaker 2 (25:14):
Right?
Speaker 5 (25:15):
When I look at an AI overview answers.
Speaker 8 (25:18):
On whether it's you know, an informational query versus an
e commerce query or a travel query or an auto query.
The pay change is so dynamic that they are able
to weave in the right ads with the right kind
of target.
Speaker 5 (25:31):
What about with the Gemini app and like the app experience,
are they able to make money doing that yet?
Speaker 7 (25:37):
Does that matter? I mean You have to.
Speaker 3 (25:39):
Remember Google does five trillion. Search is a year five.
Speaker 8 (25:43):
Trillion, So you know, even if they monetize twenty to
twenty five percent, which is the case, seventy five percent
of the queries are not monetized. Imagine how much power
they have in terms of the targeting they have with
the ads as well as the number of queries. Even
if chatgip he's taking some volume. Yeah, brilliant is a lot. Mark.
Speaker 3 (26:03):
I want to bring you back in as we've got
Mandeep seeing Brilliant part of our Bloomer Intelligence team. Mark Douglass,
President and Chief executive Officer Mountain, really great perspective in
terms of advertising within this world. But you mentioned something
about Gemini that you want to hear on the call.
Just lay it out again for man Deep so that
we can kind of dig into that with him.
Speaker 6 (26:23):
Yeah, I mean, I think it's similar comments, which is
the Google as a company. I think what's most important
to see is that they let the different parts of
the company compete. So Gemini competes with with with search results,
because if they don't compete with themselves, then open ai
and others are going to do the competition for them,
(26:45):
and so I think it's important that they let them compete.
It appears they are. And I also agree with the
other comment that he just had in terms of scale
of their business is like, you know you can increase
search results, you know, eight search results one half of
one percent, and b they have a lot of levers
(27:06):
to pull and I think they're doing a good job
pulling them to be able to navigate this linemup right now.
Speaker 8 (27:12):
And the point about Gemini not only does it like
there's a competitive aspect, but also you learn so much
more about the user. Imagine they are on Gmail Maps Search.
Now you've got one more app where you have your user,
You're learning about their type of queries. How would their
AT targeting become suddenly because they are facing through Gemini now,
(27:35):
so there's one more surface that you are adding, and
it complements their AT targeting.
Speaker 3 (27:40):
Mark brings up this concept of great to compete with
yourself and so essentially that's kind of what Alphabet's doing
right with Google Search and then Gemini. But is it
a guarantee that everybody who's been using Google is just
going to easily just kind of segue into Gemini. Can
we assume that that will happen.
Speaker 8 (27:56):
I mean, Google is still the verb and I don't
think it's changing anytime soon. Yes, you can say chat
GPT for certain informational queries and for certain queries, chat
GPT does a great job. But if you're thinking about
the Google ecosystem, you know, the all the apps that
you are used to using on the consumer side on
(28:16):
a day to day basis, it's hard to take yourself
out completely from the Google ecosystem. You'll still be using
Gmail apps, YouTube, even if you use chat GPT. I
mean a lot of times chat GPT shows you a
search result and then you go to maps to search
for you know, the exact address that chat GPT show.
Speaker 5 (28:35):
Right right, hey man d Alphabet shares up four percent
in the after hours, Meta platforms up two point three percent.
Amazon shares are hired by one percent. All happening because
of what we heard from Alphabet. Is this just a
huge sigh of relief when it comes to megacap tech,
I mean, is everything okay?
Speaker 7 (28:54):
Are we out of the world.
Speaker 8 (28:55):
I'll wait for the call, because remember Liberation Day was
April second.
Speaker 3 (28:59):
Yeah, this is through March thirty first. We don't even know.
Speaker 8 (29:02):
It's a great impact of tariffs was I mean, all
that happened at the beginning of two Q So maybe
I think too far fashion thinking, you know, we're out
of the woods. But it's a good print.
Speaker 3 (29:15):
It's a good point. It's a good point. Mark, come on, Beck,
And I'm curious if you have a question for man
deep saying, like, you know, you follow this market, you
follow this company. I'm just curious.
Speaker 6 (29:24):
Yeah, I actually want to take the conversation slightly to
another part of Google's business. One of the things, you know,
I'm still very much an active engineer, and one of
the things I'm saying is Google be very aggressive are
capturing market share in the Google Cloud business. And that's
not something I think many people are talking about today,
but that's potentially, you know, setting up from some really
(29:47):
good results in that part of the business in the future.
So I'm curious, Mandy, if you have any thoughts on
that part of Google.
Speaker 8 (29:54):
Yeah, I mean it goes to the point about you know,
then having this huge infrastructure that powers their family of
apps also powers the cloud business. And thirty percent growth
on a fifty billion dollars runderrate is very impressive, right.
The problem for Google is it doesn't generate the same
kind of profitability that search does, and that's why investors
(30:15):
don't care that much. But look, I think they could
even grow faster on the cloud side. They're probably somewhat
supply constraint that everyone is in terms of AI infrastructure,
so that cloud business could continue to compound at twenty
five thirty percent clip. For a while, we've.
Speaker 3 (30:30):
Been talking about how the stock has really popped in
the after hours. It's off some of its highest levels
in the aftermarket, Mandi, but still up about four percent.
But that point that you said, this is through March
thirty first, not before kind of the stuff hit the
fan right and has really kind of changed the environment.
Is that a very very important caveat because these are
(30:52):
the kind of companies right in the next week or so,
these big megacap tech companies that were like, what do
they have to say in this environment? So I'm just
curious if you have to be kind of smart as
we go through and.
Speaker 8 (31:02):
Not to take both sides. But on the top line,
I think search Beat wasn't that impressive as it was
the last time around. It's more the margin expansion because
everyone thought AI overviews would hurt margins. So clearly they
have executed very well on that. The buyback and the
dividend is a good capital allocation. But in the end,
you know, search Beat wasn't that impressive. You know, for
(31:25):
a five percent increase in the stock.
Speaker 5 (31:27):
Would a five percent boost to its dividend happen if
Alphabet were concerned about the environment in the current quarter
and for the remainder of the year, Mande, I mean clearly,
like is that an indication that things are pretty good?
If we look at that as a potential sign of guidance.
Speaker 8 (31:43):
It's more the fact that they traded a much lower
multiple than their peers, you know, Microsoft and Amazons, So
from that perspective, you could say management feels their stock
is cheap. But look, they're making this acquisition of wiz
where they are paying thirty three billion dollar money. It's
going to close, so it's not going to affect the
free cash flow this year. But if they spend seventy
(32:04):
five to eighty billion dollars in data center capex and
then thirty three billion dollars in this acquisition, then you know,
you're not able to fund all these buybacks and dividend
with your free cash flow.
Speaker 4 (32:14):
Anymore.
Speaker 3 (32:15):
I wonder if both of you. I'm looking at our
market's live blog and our macro strategist, one of them
writing that the headline is a beat, but it was
driven by advertising where revenue rows eight and a half
percent from a year earlier. That's not going to help
the rest of the Magnificent seven very much. Mark, you
have any thoughts on that, because we are getting ready
to have all of these names and numbers and results
(32:36):
coming at us, and we know investors love to know
what the mag seven are doing.
Speaker 6 (32:39):
Well, I think it indicates that Q one was a
healthy environment for Google and likely for other companies, especially
in tech. I think they question on Q two very
valid question fall investors, But I think for Q one,
I think maybe people are mixing these quarters together in
their mind. Q one solid for Google, guessing is probably
(33:02):
educated guess solid for these other big tech stocks.
Speaker 4 (33:06):
Also.
Speaker 3 (33:06):
All right, Mark, we're going to leave it there with you.
Thank you so much, So good to check in with
you once again. Mark Douglas, President and CEO of Mountain
joining us from Miami. Your thoughts on that, man deep
in terms of what's to come. I mean, there's alphabet
and how they make money, and then there's the rest.
Is there any assumptions we can make or not? Really,
they're all kind of different.
Speaker 6 (33:26):
Yeah.
Speaker 8 (33:26):
I think after the call we'll have a better sense
of how they are viewing the environment. I mean, the
whole thing about Chinese advertisers pulling back, and Alphabet in
general has a broader swath of advertisers on their platform.
When you think about Meta, even though you know it's
duopoly and Meta probably is more skew towards I would
(33:49):
say retail, and yeah, it doesn't have as much autos
exposure as Alphabet has, so there is some nuance with
regards to their advertiser base. Would say Alphabet is more diversifying.
So if Chinese advertisers are pulling, that will hurt metamore
for sure.
Speaker 5 (34:06):
Alphabet doesn't give guidance. So what do investors look for
on the call to understand the current climate. Well, so
CFO commentary, I mean, is there anything there that could
move the needle?
Speaker 8 (34:18):
I think whatever they say around chat, GPT and LLMS
and just overall color around competition, because this is the
first time everyone cares about, you know, comments related to search.
I mean, up until two quarters back, it was like Oh, okay,
Google is a monopoly. Everyone knows that at pricing may
(34:39):
go up and down depending on the cyclicality of the economy.
But now the competitive threat is real.
Speaker 5 (34:45):
But the competitive threat's the competitive threat with AI and lllms.
What about the just the idea that if it's an
economy where there's uncertainty, marketers pull back from advertising. That
would hit this company very hard.
Speaker 8 (34:57):
Yeah, but I think what they showed in the is
ad pricing actually rent up.
Speaker 7 (35:02):
For the first quarter.
Speaker 4 (35:03):
For the first quarter.
Speaker 7 (35:04):
This is not the second quest.
Speaker 8 (35:05):
It's not gonna again. If you think about online ads,
Google is the last place where advertisers will pull back
because it's the highest ROI out spend.
Speaker 5 (35:15):
You you get you actually you pay for what you get. Essentially, yeah,
you're not buying it.
Speaker 8 (35:20):
If you're looking for customers online, Google is still the
best place because it's the most effective. Remember, they collect
data from eight apps that you're interfacing with, and that's
why the ad is so targeted. Google Metal also has
four apps, but then Google probably has more data about
you in terms of targeting you.
Speaker 7 (35:39):
That's why they're so effective, right.
Speaker 3 (35:40):
Really specific data right of exactly what you are doing
to instent of it on any given No, that's why
I don't understand why they're showing me the car searches.
Speaker 7 (35:48):
But I don't know why they keep showing me cars.
I'm not buying cars.
Speaker 3 (35:51):
No, it's really fascinating, Men Deep, Thank you as always always,
Men Deep saying, of course, senior tech industry analysts with
our Bloomberg Intelligence team, shares off a bit, folks, up
about three point nine percent in the aftermarket, definitely off
its best levels of the day. Sales beat estimates on
Google Search advertising.
Speaker 5 (36:08):
Yeah, in just a few minutes, we're going to be
speaking to Ed Ludlow on Intel because shares of Intel
in the aftermarket down six point three percent.
Speaker 2 (36:15):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 5 (36:29):
Well, shairs of Intel are selling off in the after hours,
down right now by about five point three percent. It's
attempting this comeback under a new CEO, lit Bhutan, and
it gave a week forecast for current period. Also said
it's cutting workers to bring costs in line with the
business's smaller side. With more on Intel, we head out
west to talk to the co host of Bloomberg Technology
at Ludlow, who caught up earlier with Intel's CFO to
(36:50):
talk about the earnings and the outlook. He joins us
from the Bloomberg San Francisco News Bureau. What did you
learn ad from Intel's CFO.
Speaker 3 (36:58):
Yeah, I think quite a lot.
Speaker 9 (37:01):
Intel is still very far from where it wants to be,
from where its customers want it to be, and the
only way to get there is to readjust the makeup
size of the workforce and also you know, look very
closely at the balance sheet, and so like the major
step that they're taking is pulling back on op X
(37:21):
and CAPEX. They confirmed our reporting that there is going
to be layoffs frankly, and that that thos layoffs are
going to be in middle management. But it's really a
story about a company that has a new CEO who's like,
you know what, we are going to just get focused
on technology. Although you know, as I said that, you've
(37:43):
got a bit of sense of deja vous, because that
was kind of the story the last time we had
a new ZEO.
Speaker 5 (37:49):
I was going to how many years have we been
talking about a turnaround at Intel?
Speaker 9 (37:53):
Yeah, so I was just wanting and king about Bloomberg's
and king about this. It's like, what is the single
head line on Intel, what is the new focus and
where are they going to pull back? You know, Pat
Gelsinger really wanted Intel to be a contract manufacturer to
the world, right do what TSMC does alongside having its
(38:14):
own products. Bhutan has just sent an email to employees
this afternoon that we've seen and read and basically reading
between the lines, I think that that is not a
priority for him, the contract manufacturing bit. I think he's
acknowledging and Dave Zinzna went through this on the phone
with me that customers want one thing right now right,
(38:34):
which is AI accelerators, high performance GPUs or AI chips
that are involved in the training and inference stages of
large language models and AI models. And Intel's just not
been at the races there. So materially, what they're doing
is they're cutting out middle management. They're going to rehire
better people in the engineering space. And you may have
seen a headline on the terminal just a couple of
(38:56):
minutes ago they're going to make people come back to
the office four days a week, which is interesting because
like they're kind of late to do that in all
the names we cover here.
Speaker 7 (39:04):
Wait, so they haven't been coming to the office four
days a week.
Speaker 3 (39:08):
Is this the recipe for making Intel again a dominant
chip player?
Speaker 4 (39:14):
I don't.
Speaker 9 (39:15):
I don't want to confuse our audience. But basically, in
the history of Silicon Valley and the world of technology,
Intel is at its origin. Right when we think about
the early days of semiconductors and the cutting edge of
semiconductors and an annual cadence where technology got better, Intel
was like the leader there and for a long time
it has not been. It has fallen away. And you know,
(39:37):
Zinzna when we was on the phone with me, and
you know there's a reason that zins and the CFO
was on the phone with me, right lit Bhutan is
very early, it's just been at the company a couple
of weeks. But they are trying to address culture. They
think that basically that the culture that needs to be
there to be like roofless and win and get ahead
in the world of technology is not in place. And
so yes, there will be a reduction enforce that will
(39:59):
target middle MA, but I was surprised as anyone to
see that part of that strategy is getting people to
come back to offices, not just here in the valley
but around the world.
Speaker 5 (40:08):
Is the reporting that the Bloomberg News team did earlier
this week around the layoffs that was confirmed today are
those we discussed?
Speaker 7 (40:17):
It?
Speaker 5 (40:18):
Are those numbers consistent with what we learned today publicly
from Intel.
Speaker 9 (40:22):
So what Dave's inside of the CFO said to us
on the phone was, I'm paraphrasing, but it was an
interesting number because I don't quite have one yet myself.
Speaker 3 (40:35):
But the reason he doesn't is.
Speaker 9 (40:37):
That he knows what the opex and capital expenditures targets are.
Now those are firm, right and you guys may have
gone over those on air, but they've reduced op X
and CAPEX for the full year CAPEX by about two
billion dollars, and then op X came down a similar
amount as well. And from that and knowing where in
the ORG they're going to cut middle management, Dave knows
(40:58):
what the end goal is, but he said, I don't
have a percentage of overall workforce net what the layoffs
will be, but they were confirmed there will be a
reduction in middle management. And you know, the quote was
very simple that they are going to cut out the
bureaucracy that currently is in that company as well.
Speaker 3 (41:17):
So the CEO saying in a statement, I'm taking swift
actions to drive better execution and operational efficiency while empowering
our engineers to create great products. We're going back to
basics by listening to our customers and making the changes
needed to build the new Intel. So it's top customers, Dell, Lenovo, HP, Microsoft, Amazon,
What do those customers want? What do they want from Intel?
Speaker 9 (41:41):
They want better products that where the technology can do
better things. And on the phone, Dave was pretty forthright
in saying that trust with their customers is not really
in a great place at the moment. You know, Bhutan
in that statement you just referenced, said that a lot
of their problem right now and the reason that he's
going to have to take severe action is due to
(42:03):
prior actions the company has taken. And I think he
was of course talking about the last leadership team. You know,
the story of Intel is the stockstown five percent right,
well almost six percent. We should like be clear that
things have not improved, and you know, nor would you
expect them to. It's only been a few weeks that
the new CEO has been in place, but you know
they beat in the first quarter where very simply there
(42:25):
was a pull forward. Right those customers you just listed
ordered chips in advance of tariffs coming, and hence the
outlook for the current period is not great because they
took from what they would normally order now into that
first quarter, and the second quarter is not great.
Speaker 7 (42:39):
You know.
Speaker 9 (42:40):
So there's a lot that needs to be done here.
Designing and building cutting edge chips is what they plan
to do.
Speaker 7 (42:47):
Can I talk about William with Ed?
Speaker 3 (42:49):
You could do whatever you want. This is America, you
can do it.
Speaker 7 (42:53):
Ed's been riding in these forever. You know.
Speaker 5 (42:55):
It took me to my last I guess a couple
of trips ago to San Francisco to do this.
Speaker 3 (42:59):
I guess it change man, change myself road in a WEYMO.
Speaker 5 (43:03):
But Romaine brought this idea up on the close that
you know, it's in the other bets category of alphabet
and there are you know, questions about how much these
vehicles cost. What is the current valuation. You've written about
this a few months ago. What is how is WEIMO valued?
Speaker 7 (43:17):
As a business.
Speaker 9 (43:18):
I listened to your conversation with the clothes anchors and
with Mandeep as well. Astonishing what you guys got through
that Weimo what we reported in its most recent private
funding rounds forty five billion. But there are a few
things that I think remain. In particular, I'd love to
discuss this with Weimo has outside investors, and it is
a material hardware company that's very different to Chrome. Yeah,
(43:43):
you know what Romain was talking about is the valuation
that that Chrome was assigned in the course of this
antitrust trial. That fifty billion dollar Chrome valuation was given
by the Duck Duck go CEO. But at the core
of Chrome is that it's underlying technology is open source.
So Microsoft's Edge browser is made of the same code
base that Chrome is. They're they're not apples to apples.
(44:05):
But he is right in the long term, like Waimo
has a viable teacher. Many would think it's just that
like that is far away, it is super far away.
Speaker 5 (44:15):
Well appreciate you joining us, great perspective. Ad La Low,
co host of Bloomberg Technology in San Francisco.
Speaker 2 (44:21):
This is the Bloomberg Business Weekdaily podcast, available on Apple Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot Com,
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Speaker 1 (44:39):
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:08):
This is Bloomberg business Week, Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business finance
and tech news as it happens. The Bloomberg Business Week
Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 3 (00:32):
We have a great guest, someone we turn too often
when it comes to some of the big issues that
are facing global relationships. Back with us, as Ed Price.
He's a former British trade official. He's now nonresident Senior
Fellow at New York University's advised members of the European
and British parliaments. He's a former British trade official, and
he writes often about politics, economic policy, and so much more.
(00:54):
And he joins us now from upstate New York. Good
to have you here. How are you?
Speaker 4 (01:00):
I'm well, Carol, thanks again for having me.
Speaker 3 (01:02):
How are you doing well? Trying to keep up and
certainly taking our cues out of the White House and
specifically just moments ago from the Oval Office. Let's start
with I think what is top of mind? And it
seemed to be top of mind for the discussion between
the Prime Minister of Norway and President Trump just moments ago,
and that is Russia Ukraine. US is expected to demand
(01:24):
that Russia accept Ukraine's right to have its own army
defense industry as part of a peace agreement between Moscow
and Kiev. And Kiev, how do you see these developments
and where it might be going and in what might
bring this to an end, if anytime soon?
Speaker 4 (01:41):
Sure, So I'm very puzzled about the situation in Ukraine, honestly,
because it seems to me from the outside that Putin
has been slowly losing this war, and slowly losing this war,
at least against his initial ambitions, which as we know,
included the seizure of all of Ukraine and the installation
of a puppet government. And so you go away and
read about this, ask people that better informed than I,
(02:03):
maybe who travel more frequently over there. They'll tell you
that Putin is doing pretty poorly and that the Russian
economy is not in the sort of place that could
continue this war for long. And so when I see
President Trump announce that he's going to come up with
a deal, I don't understand why he doesn't push forward
with more weapons and more supplies to Ukraine in order
(02:25):
to push that deal forward, whatever it is. So it's
very confusing because on the one hand, Trump seems to
offer carrots to Putin, carrots that Putin hasn't asked for
while withdrawing the stick. I haven't actually read the art
of the deal. That might be how you're supposed to
do it, but I'm not sure well, and.
Speaker 5 (02:40):
It does to be fair to the president, something that
he has been consistent about is the disdain that he
has for the loss of life, and it's something that
he mentioned several times today talking about the thousands of
young people who continue to die in Ukraine each and
every week as a result of this war. Could it
be in your view that he just wants to end
the fighting.
Speaker 4 (03:02):
He may want to end the fighting, but I'm not
sure that the same man who threatens Greenland, Panama and
Canada with possible military action truly cares about the loss
of life. So I would put that down to a
nice talking point that he does well to repeat because
it's a powerful one, and I should be careful myself
as an analyst not to enjoy or celebrate wars, and
we talk about this one in Ukraine very often. It
(03:24):
is indeed tragic. Now that might be cynicism. I don't
look at President Trump at his entire policy agenda, his
entire foreign policy agenda, and think this is someone who
cares about lives. Need I remind the people watching or
listening to this live stream that we've also been sending
people without due process to El Salvador. So I would
(03:46):
certainly take President Trump's concern for human rights or the
loss of life with a pinch of salt.
Speaker 3 (03:51):
The other thing is that the President has certainly talked
a lot about and to be fair, it's and is
maybe his quest and his mission to make sure that
the US has what it needs for national security. And
I think it's safe to say that a lot of
nations are thinking about this at this point. He talked
about Greenland important for international peace. You've been traveling ed.
You've been not necessarily to Greenland anytime soon, but you
(04:15):
have been to Panama, You've been to Canada. I am
curious what you've been hearing seeing when it comes to
maybe a new global order.
Speaker 4 (04:25):
Well, if there's a Bloomberg challenge for me to go
to Greenland. I accept, and I'll put back. We'll work
on it. Canada and Panama are in the same mood,
and when an American citizen turns up and says, look,
what do you think? The answer is not much. Both
of those countries are very upset with the idea that
the United States, the apparent champion of liberty and it's
(04:47):
two hundred and forty nine year history, would be threatening
the annexation of allies. It's completely bizarre, and it's also
something that I think is causing quite a lot of stress.
Speaker 6 (04:59):
Now.
Speaker 4 (04:59):
The Canadians and the people in Panama were very polite
to me. That might be because they were misled by
my accent and they, you know, they thought I was British.
But as soon as I said, look, I'm actually American
in a hotel lobby or even at the checkpoint, there
were raised eyebrows. So we always talk about whether Trump
is serious in his foreign policy script. I don't know
if he is or not. I think is, but other
(05:20):
people abroad do.
Speaker 5 (05:23):
Do you think there's a legitimate argument for the United
States to want to annex Greenland?
Speaker 4 (05:30):
No?
Speaker 7 (05:30):
I from a security perspective, ed, No.
Speaker 4 (05:33):
It's completely insane. Because whatever the gain in annex in Greenland,
there would be a loss in the EU as an ally.
And you know, you could never fully sit down with
the eyes and ears of God and calculate what that
net calculation would be. But I'm pretty sure you could
take a rough estimate and say, okay, we expand our
(05:53):
presence in Greenland, we formally change the deed, we say
we own it, and we put a few more troops
in there. Just imagine how annoyed and disgusted Denmark, France
and other EU countries would be with US. I mean
they could turn around and say, well, look, if the
United States is actually willing to cross frontiers and take
land that doesn't belong to them, maybe a deal with Beijing,
(06:15):
which to be fair to the Chinese, you know they
haven't actually done that. Maybe a deal with China is
in our interests long term. So I think it's there's
absolutely no argument for it when you sit down and
do the next calculation. If you have a simple view
of the world and you think this is mine, that's theirs,
then you of course, like we said before, you can
draw a sharpie around an area and say it's mine.
But I don't think that that's taking into account the
(06:37):
second order effect of losing the Europeans.
Speaker 5 (06:39):
Well, just a reminder of what the President said last
month in an address to Congress, quote, we need Greenland
for national security and even international security, and we're working
with everybody involved to try to get it. One way
or the other, We're going to get it.
Speaker 6 (06:52):
You know.
Speaker 3 (06:52):
One of the things I think about ED two as
we are watching kind of the back and forth between
world leaders, I guess what I'm most obsessed with is
US and China, just because they are the two big
economies and determine and control. I think it's safe to
say so much. Having said that, what is you know,
the strategic balance as China is not that China. It
(07:12):
was five years ago or ten years ago that maybe
needed an a SIST or twenty years ago, right when
so many different global companies set up shop there. We've
been talking a lot about the EV market and BYD
and the advancements that China has made technologically in this world.
And they have done this largely by supporting so many
(07:32):
of their industries and helping them develop. So I do wonder.
We had the Whirlpool CEO on yesterday, who manufactures about
eighty percent here in the United States. Eighty percent of
their supply chain is here, and is someone I would
say safe to say supportive of some of the terraff
pushback to help him develop his domestics.
Speaker 5 (07:50):
He's already got the domestic production, so he's in a
good position.
Speaker 3 (07:54):
It's in a good position. So what is like as
you talk to world leaders as you travel you know
some of the argument many would say that Trump has
makes some sense in terms of developing some industries here,
protecting our national security. What is the balance for any
nation US, China or the Europe region to have that
and yet kind of get along on a global basis,
(08:17):
which is necessary for things like climate change, the environment,
and so much more.
Speaker 4 (08:24):
Well, let's go through the exercise, Carol, and let's be
fair to President Trump. I think that he deserves an
A plus on his report cards for identifying global problems.
This is the man that's identified that the Breton Woods
trade imbalance, that is that other countries have a higher
tariff rate than the US. He's the man that identified
(08:45):
that that's out of date, and he joined the dots
between that and an unsustainable fiscal position in the United States.
He's also right to be fair to the president to
point out that great power politics and great power behavior
is a feature, not a of history, and that the
United States should be ready at some point in the
twenty first century for conflict. So the president, from you know,
(09:06):
some analyst like me, gets an A plus on identifying
the problems. Where we run into trouble is the execution
and the suggestion that Donald Trump, alone, in his sort
of chaotic ad hoc behavior, is helpfully moving the United States,
its allies, and the world back into a new, more
helpful equilibrium. So I don't think that that's what he's doing. Yes,
(09:30):
the United States cannot continue to borrow the way it's
borrowing and subsidize the world's security. But the way to
fix that is to keep our allies closer, is to
do trade deals with the people that like us, and
maybe even reduce tariffs with them. So he has to
get what A D A D minus. You know, I
don't want to fail the guy out right, because he's
(09:50):
the President of the United States and his success is
everybody's success. But this sort of right, this chaotic approach
to things, is not going to bring the world into
so far as I can see, any new equilibrium, despite
what Scott Besson and Marco Rubio tried to do. After
Trump has spoken which is toned up in the press
and say actually this is what he really meant.
Speaker 3 (10:09):
Yeah, it's why folks like David Brooks of The New
York Times has said, you know, the President is maybe
the wrong answer to the right question, because I think
many would say, whether it's tariffs or geopolitics or positions
in the world, that he's brought up a lot of
issues that need to be dealt with and discussed ed.
We apologize things have gotten a little hectic today and
obviously we had to listen to President Trump there at
(10:31):
the White House. But we hope we can get you
back real soon. Really appreciate you weighing it. Ed Price
always timely, senior fellow at NY You non resident senior fellow,
former British trade official, joining us once again here on Bloomberg.
Speaker 2 (10:45):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Applecarplay and the Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (10:59):
All right, folks, we've been watching some of the airlines.
I feel like we've been watching them for a few
weeks at this point. But we did have American come
out withdrawing its full year earnings out look, joining a
growing number of companies that say unease about the US economies,
making it difficult to forecast how the year will play at.
You also had Alaska Air saying second quarter earnings will
come in below Wall Street estimates, and then Southwest Air
(11:21):
raining and growth this year as volatility surrounding US trade
policy is chilling out consumer demand on air travel. I'm
just hoping fares come down. But we are watching this sector.
We've got a great voice to talk about it.
Speaker 5 (11:32):
Yeah, it's great to add back with someone who knows
the industry so well. Sheila Kaiaalu's here. She's managing director
and equity research at Jeffrey. She joins us here in
the studio. How bad is it for airlines right now?
Speaker 1 (11:43):
It seems like it's stabilizing. It was pretty bad a
month ago, and it.
Speaker 7 (11:46):
Was when we yea heard from Delta with drawing.
Speaker 1 (11:48):
Yes, Delta with drawing. We downgraded the sector to half
cell ratings and underperform ratings. But that news the sort
of price.
Speaker 8 (11:54):
Dan.
Speaker 1 (11:54):
That's why you're seeing American and Southwest kind of tread
water today because we've seen this tape before with domestic
leisure really being the soft spot off peak hours Tuesday Wednesday,
Blying really not getting passenger demand. Southwest putting up seventy
three percent load factors. That means the plane is about
three forts full, should be eighty two to eighty five
percent full. So we've seen that that's where the maronment that's.
Speaker 3 (12:18):
More than three percent. I was kind of shocked when
I went to look at what the price was. I thought, Okay,
it's going to be selling off. But you're saying most
of that stuff is it's starting.
Speaker 1 (12:25):
To get its chriced in because we've heard it now
for a month and it seems like the consumers able
to hold stable. But we also have a pause on tariff,
so let's see how that works itself out. We heard
from Boeing this week, we heard from General Electric and Raytheon.
These are aftermarket suppliers on engines, et cetera, and so
what they're doing is they're cutting their departure forecast from
(12:45):
mid single digit to low single digit. That means the
numbers of planes that are taking off, but that's based
on what's already happened with Delta and United cutting capacity
and even Southwest cutting mildly, and they're not really seeing
further weakness internationally. That's what we're hearing. That the market's
holding stable over the last six to eight weeks from
(13:06):
the fall off we saw starting March first.
Speaker 7 (13:07):
So how's business travel?
Speaker 1 (13:09):
Corporate travel seems like it's okay, but it depends on
the sector in the airline. You know, Southwest was a
little bit more robust. American has a very idiosyncratic story
because they removed their corporate booking channels last year, so
they have a super easy comp United and Delta called
out weakness obviously across government customers and certain manufacturing markets
(13:31):
like autos and even aerospace where they saw softness, but
financials tech was still holding up.
Speaker 3 (13:36):
So we'll see not a great reveal, but we've got
like two, three, four trips going out to the West
Coast in like the next month or so.
Speaker 5 (13:44):
Yeah, and we've booked zero tickets at this point. That's
fun to do.
Speaker 3 (13:48):
I have one booked, I have one book So what
are the airlines doing in terms of pricing? I know,
somebody else who was looking for a flight and saying, well,
wait are there's some softness and it was so expensive.
I think you go to Puerto Rico or something like
a hearing in terms of pricing.
Speaker 1 (14:00):
Well, I haven't checked out Puerto Rico flights. I wish
I would, but I met it's a Brazil and Paris
and a Dallas trip coming up, and none of them
are book yet. You know, folks post pandemic are booking
closer in and so you don't have flights book neither
do I. We haven't seen that price. I haven't seen
the pricing softness. No, but the airlines are calling it out,
especially in that domestic leisure market. So if we were
(14:22):
going to Florida and May, we'd probably get a discount
a ticket, or you know, Southwest called out that route
from Tucson to Albany. I'd like to know the guy
doing that route.
Speaker 3 (14:32):
But that's where they're seeing that weakness. I love you
and Tucson in Albany that we're just going to say, yeah.
Speaker 5 (14:38):
Yeah, I do wonder about just really what's happening when
you think about demand from the perspective of international travel.
You said that it's kind of holding up. But at
the same time, we're hearing reports that travelers coming to
the US from outside of the US are holding off,
and we're seeing that fall a little bit. Is that
showing up yet in results or in bookings, especially for
(15:00):
the summer?
Speaker 1 (15:01):
It seemed like for now international still holding up, especially
with europe strength there. We heard some rumblings about Canadian weakness.
Folks have sort of put an end to that, saying
it's only down ten percent, not the significant numbers we've seen.
So ten percent is something, it's significant, but we were
seeing numbers in the realm of seventy percent, so the
(15:22):
ten percent definitely scaled it back. So Canada is an
area we've heard weakness. We saw some European airlines call
out weakness coming into the US versus US originated flights
to Europe are still holding out pretty well, which is interesting.
Speaker 3 (15:36):
Yeah, I'm kind of surprised because I do feel like
there's some headlines on stories that are like, oh my god,
nobody's coming in, you know, traveling to the US and
or you know, even traveling elsewhere. Can we talk a
little bit about Boeing, Sure, tell me you're thinking, you know,
you cover the company. They've reported first quarter results exceeded
Wall Street estimates. You know they've done a deal, right,
(15:57):
getting rid of their flight navigation unity. What's how are
you thinking about next six twelve months for Boeing or
even longer term.
Speaker 1 (16:04):
I love Boeing when folks get negative, so the days
when it hits one forty, when we hear about people
canceling airplanes or thoughts of that. But you know, Kelly Orper,
yesterday the Bowing CEO said there's no change in the skyline.
Folks are waiting six years for the aircraft. They've been
waiting since twenty nineteen. Right Southwest is still waiting. We're
all waiting for airplanes to be delivered. No one's moving
(16:25):
out of line. The only customer who is is China.
Speaker 3 (16:28):
But they've been reducing for a while.
Speaker 1 (16:30):
China's been reducing. They've been about twenty percent of deliveries.
They're actually only five to seven percent of the official backlog,
but Chinese operators use undisclosed, So yesterday we know that
it's about fifteen percent of deliveries this year. In the
first quarter, Boeing delivered eighteen aircraft to China. They expect
another fifty for the full year, and our estimates are
around four hundred and seventy five. So China is a
(16:52):
risk and probably why Boeing didn't sound a little bit
more bullish. But they seem like things are working well
with the ramp on the three seven and all the
rest of the skyline.
Speaker 5 (17:00):
The President sending a message on his social media platform
this morning about Boeing, saying, quote, Boeing should default China
for not taking the beautifully finished planes that China committed
to purchase. This is just a small example of what
China has done to the USA for years, the Washington
involvement with Boeing, for better or for worse. I mean,
there's been a lot of criticism too, come from the
President about the new version of Air Force one, the
(17:22):
seven forty seven. Ken Boeing just sell those planes to
other countries because there is such a backlog if China
were to dry up.
Speaker 1 (17:31):
I think there was a headline about an hour ago
saying Air India might buy those Chinese planes. So here's
a note we put out three weeks ago. It was
called how many planes does it take to get to
the bottom of the trade deficit? When you think about
aerospace and defense. It is the only manufacturing center with
a sector with a sixty two billion dollar surplus. So
what can you buy if you have a trade deficit
(17:51):
that costs seventy million or four hundred million an airplane?
It's easily trackable. So we did a note where we
looked at every one point of reduction to the Chinese
US deficode, which is two hundred and finety five billion
is about fifty plans. So obviously it would take a
lot of planes from China.
Speaker 3 (18:05):
To offset it.
Speaker 1 (18:06):
But it's a good chip President Trump could put on
the table for folks.
Speaker 3 (18:10):
All right, on your radar for Boeing last twenty seconds,
just watch what.
Speaker 1 (18:15):
Free cash flow and max production. That's all that matters.
Speaker 3 (18:18):
All right, great stuff, Thank you so much, sheille I
really appreciate it. She's managing director and equity research over
at Jeffreys, joining us here in studio.
Speaker 2 (18:27):
This is the Bloomberg Business Week Podcast. Listen live each
weekday starting at two pm Eastern on Apple car Play
and Android Auto with the Bloomberg Business App. You can
also listen live on Amazon Alexa from our flagship New
York station, just Say Alexa played Bloomberg eleven thirty.
Speaker 5 (18:45):
Three point eight percent of the upside is where we
see shares of Alphabet, the parent company of Google. The
company reported first quarter revenue and profit that exceeded analysts expectations.
It was bullied by continued strength in its search advertising business.
And that's exactly where we want to go.
Speaker 6 (19:00):
Now.
Speaker 5 (19:00):
We've got back with us Mark Douglas. He's president and
CEO of Mountain. The company is software that helps companies
target advertising on smart TVs. He understands the ad spend market.
He joins us from Miami. Mark, good to talk with
you again. Does this surprise you given the trends that
you're seeing when it comes to advertising?
Speaker 6 (19:19):
Not given the trends I think the trends for I
want to talk more specifically about Google.
Speaker 7 (19:26):
Yeah.
Speaker 6 (19:26):
I think we started the you know, we started the
year and I think everyone literally everyone was very optimistic
about the economy, you know, Q one and Google's reporting
on those results, I think they did very well. I
think there were concerns and continue to be concerns about
whether AI on their platform, meaning in your search results,
(19:48):
is going in some way negatively impact the search business.
But I think as an investment even there just provide
some comment on that. Look, I'd rather have Google competing
with themselves than allowing other people to compete with them.
So I think even that's a positive if in the
future it does have some you know, negative impact.
Speaker 3 (20:04):
Well, you know, it's funny that you say that, you know,
and I'm looking at our right through by our Davy Alba.
But this whole idea that you know, alphabet, Google has
to show right that it still has momentum and search,
advertising and cloud, but at the same time show that
it's as it makes incredible investments in the AI build out,
(20:25):
as the world kind of shifts in that direction, that
it's also there as well. It's really tricky, and this
is what our man Deep Singh said. You know, this
is a company that's got seven apps with over i
think two billion monthly active users. It's bread and butter
is still Google, right, and it's search business. But as
people move to chat, Gibt or Gemini like, that's a
(20:47):
tough transition. It's got to juggle a lot.
Speaker 6 (20:50):
Yeah, and then like I said, I think if I'm
an investor in Google, the I always say to my company,
better we compete with ourselves than we allow someone else
to do it. So if I'm an investor, what I'm
looking for is that the management team is awake, they're alert,
and they're ready to compete. And I think Google's showing
that and what they're doing with Gemini, and they're showing
(21:13):
that they can still navigate search also with a company
with that scale. You mentioned the tremendous scale they have. Honestly,
you can find you can always squeeze out more revenue
and as a result, more earnings. So I think it
also shows that they can manage the business in order
to find those extra dollars if they need to, while
they might be challenged in other areas.
Speaker 5 (21:35):
Is this the classic innovator's dilemma? Though Google's core search
business is so profitable and it's so entrenched, and it's
so ingrained and pretty much almost every country in the world,
you have to say almost that there is a concern
that it doesn't want to cannibalize that with investment in Gemini.
Speaker 6 (21:57):
Yeah, that's what you don't want to see what you
want them to be like, like you almost wanted to
be two separate companies, and they just go at it
and made the best you know, part of Google win.
Speaker 3 (22:11):
The other thing they wanted to Google wins. That's the point, right,
Like you said, you like to be competing with yourself
forgive me go ahead.
Speaker 4 (22:18):
No exactly.
Speaker 6 (22:19):
The other thing to remember, you know, mobile was a
big threat to Google. Yeah, like like Google was all
desktop and you have your browser out. That's still you know,
obviously a huge part of their business. And people were
very worried about whether, you know, people were going to
search on mobile and if they did, whether they were
going to respond to the ad. So, I mean, it's
not the first time Google has been challenged by new
(22:41):
technologies and they you know, honestly kudos to them, because
I expected Gemini to to possibly cause some problems in
Q one and the yeah, in terms of their revenue,
and obviously it hasn't.
Speaker 3 (22:56):
Hey, one last question on the upcoming call with analysts,
what do you what would you be asking?
Speaker 6 (23:02):
What do you want to hear the I would be
all about Gemini and how AI results at the top
of the search page, which essentially I have replaced the
paid you know, the click ads, the paid ads at
the top of the search page for a lot of
the searches. I would want to ask every possible question
(23:24):
I can on data related to how that's impacting this
that their search revenue. There's search results, responses to the searches, everything,
and try, if I'm an analyst, try to model that out.
Speaker 3 (23:35):
All right, we're talking, of course with Mark Douglas, president
and CEO of Mountain. We want to bring into the
conversation Man Deep. Seeing he is senior tech industry analyst
at Bloomberg Intelligence, just coming in the studio. It's a
little crazy, so he hasn't heard everything that Mark had
to say. But Mark said, you know, he's curious about
Gemini is something he's going to be looking out on
(23:55):
the call. Man Deep, you told us, you told us
what to do. Man dprrect you NonStop because you said
it's all about search. So walk us through what they
got in and how it how it's sees, how it
looks for you because investors like it.
Speaker 8 (24:08):
Yeah, I mean the Google Services revenue was a slight beat,
but what was really impressive was the margin beat on
the Google Services.
Speaker 6 (24:17):
And a lot of.
Speaker 8 (24:18):
It is because everyone thought, because they're adding AI overviews,
that's going to hurt the margins of search.
Speaker 4 (24:25):
Oh it didn't happen.
Speaker 7 (24:27):
Why didn't Why didn't that happen?
Speaker 5 (24:28):
What's because you have to explain this from the perspective
of a Google user, like the experience, if we get
the if we get the answer with the AI overview,
we're not looking at ads, We're not clicking on things.
Speaker 7 (24:37):
Yeah, why doesn't it hurt?
Speaker 8 (24:39):
Because they have so many different types of queries on
Google Search that some of those queries they are able
to monetize it just through ads on AI overviews. Remember,
Google never went away from ads, even though they integrated elements.
Ads has always been a core part of of the
(25:00):
Google dot Com offering, even with the AI overviews, and
they somehow weave the ads in a way where they're
able to charge for those ads. That's what makes them
so special.
Speaker 7 (25:11):
I can't I never look at an AD on like
what is wrong?
Speaker 2 (25:14):
Right?
Speaker 5 (25:15):
When I look at an AI overview answers.
Speaker 8 (25:18):
On whether it's you know, an informational query versus an
e commerce query or a travel query or an auto query.
The pay change is so dynamic that they are able
to weave in the right ads with the right kind
of target.
Speaker 5 (25:31):
What about with the Gemini app and like the app experience,
are they able to make money doing that yet?
Speaker 7 (25:37):
Does that matter? I mean You have to.
Speaker 3 (25:39):
Remember Google does five trillion. Search is a year five.
Speaker 8 (25:43):
Trillion, So you know, even if they monetize twenty to
twenty five percent, which is the case, seventy five percent
of the queries are not monetized. Imagine how much power
they have in terms of the targeting they have with
the ads as well as the number of queries. Even
if chatgip he's taking some volume. Yeah, brilliant is a lot. Mark.
Speaker 3 (26:03):
I want to bring you back in as we've got
Mandeep seeing Brilliant part of our Bloomer Intelligence team. Mark Douglass,
President and Chief executive Officer Mountain, really great perspective in
terms of advertising within this world. But you mentioned something
about Gemini that you want to hear on the call.
Just lay it out again for man Deep so that
we can kind of dig into that with him.
Speaker 6 (26:23):
Yeah, I mean, I think it's similar comments, which is
the Google as a company. I think what's most important
to see is that they let the different parts of
the company compete. So Gemini competes with with with search results,
because if they don't compete with themselves, then open ai
and others are going to do the competition for them,
(26:45):
and so I think it's important that they let them compete.
It appears they are. And I also agree with the
other comment that he just had in terms of scale
of their business is like, you know you can increase
search results, you know, eight search results one half of
one percent, and b they have a lot of levers
(27:06):
to pull and I think they're doing a good job
pulling them to be able to navigate this linemup right now.
Speaker 8 (27:12):
And the point about Gemini not only does it like
there's a competitive aspect, but also you learn so much
more about the user. Imagine they are on Gmail Maps Search.
Now you've got one more app where you have your user,
You're learning about their type of queries. How would their
AT targeting become suddenly because they are facing through Gemini now,
(27:35):
so there's one more surface that you are adding, and
it complements their AT targeting.
Speaker 3 (27:40):
Mark brings up this concept of great to compete with
yourself and so essentially that's kind of what Alphabet's doing
right with Google Search and then Gemini. But is it
a guarantee that everybody who's been using Google is just
going to easily just kind of segue into Gemini. Can
we assume that that will happen.
Speaker 8 (27:56):
I mean, Google is still the verb and I don't
think it's changing anytime soon. Yes, you can say chat
GPT for certain informational queries and for certain queries, chat
GPT does a great job. But if you're thinking about
the Google ecosystem, you know, the all the apps that
you are used to using on the consumer side on
(28:16):
a day to day basis, it's hard to take yourself
out completely from the Google ecosystem. You'll still be using
Gmail apps, YouTube, even if you use chat GPT. I
mean a lot of times chat GPT shows you a
search result and then you go to maps to search
for you know, the exact address that chat GPT show.
Speaker 5 (28:35):
Right right, hey man d Alphabet shares up four percent
in the after hours, Meta platforms up two point three percent.
Amazon shares are hired by one percent. All happening because
of what we heard from Alphabet. Is this just a
huge sigh of relief when it comes to megacap tech,
I mean, is everything okay?
Speaker 7 (28:54):
Are we out of the world.
Speaker 8 (28:55):
I'll wait for the call, because remember Liberation Day was
April second.
Speaker 3 (28:59):
Yeah, this is through March thirty first. We don't even know.
Speaker 8 (29:02):
It's a great impact of tariffs was I mean, all
that happened at the beginning of two Q So maybe
I think too far fashion thinking, you know, we're out
of the woods. But it's a good print.
Speaker 3 (29:15):
It's a good point. It's a good point. Mark, come on, Beck,
And I'm curious if you have a question for man
deep saying, like, you know, you follow this market, you
follow this company. I'm just curious.
Speaker 6 (29:24):
Yeah, I actually want to take the conversation slightly to
another part of Google's business. One of the things, you know,
I'm still very much an active engineer, and one of
the things I'm saying is Google be very aggressive are
capturing market share in the Google Cloud business. And that's
not something I think many people are talking about today,
but that's potentially, you know, setting up from some really
(29:47):
good results in that part of the business in the future.
So I'm curious, Mandy, if you have any thoughts on
that part of Google.
Speaker 8 (29:54):
Yeah, I mean it goes to the point about you know,
then having this huge infrastructure that powers their family of
apps also powers the cloud business. And thirty percent growth
on a fifty billion dollars runderrate is very impressive, right.
The problem for Google is it doesn't generate the same
kind of profitability that search does, and that's why investors
(30:15):
don't care that much. But look, I think they could
even grow faster on the cloud side. They're probably somewhat
supply constraint that everyone is in terms of AI infrastructure,
so that cloud business could continue to compound at twenty
five thirty percent clip. For a while, we've.
Speaker 3 (30:30):
Been talking about how the stock has really popped in
the after hours. It's off some of its highest levels
in the aftermarket, Mandi, but still up about four percent.
But that point that you said, this is through March
thirty first, not before kind of the stuff hit the
fan right and has really kind of changed the environment.
Is that a very very important caveat because these are
(30:52):
the kind of companies right in the next week or so,
these big megacap tech companies that were like, what do
they have to say in this environment? So I'm just
curious if you have to be kind of smart as
we go through and.
Speaker 8 (31:02):
Not to take both sides. But on the top line,
I think search Beat wasn't that impressive as it was
the last time around. It's more the margin expansion because
everyone thought AI overviews would hurt margins. So clearly they
have executed very well on that. The buyback and the
dividend is a good capital allocation. But in the end,
you know, search Beat wasn't that impressive. You know, for
(31:25):
a five percent increase in the stock.
Speaker 5 (31:27):
Would a five percent boost to its dividend happen if
Alphabet were concerned about the environment in the current quarter
and for the remainder of the year, Mande, I mean clearly,
like is that an indication that things are pretty good?
If we look at that as a potential sign of guidance.
Speaker 8 (31:43):
It's more the fact that they traded a much lower
multiple than their peers, you know, Microsoft and Amazons, So
from that perspective, you could say management feels their stock
is cheap. But look, they're making this acquisition of wiz
where they are paying thirty three billion dollar money. It's
going to close, so it's not going to affect the
free cash flow this year. But if they spend seventy
(32:04):
five to eighty billion dollars in data center capex and
then thirty three billion dollars in this acquisition, then you know,
you're not able to fund all these buybacks and dividend
with your free cash flow.
Speaker 4 (32:14):
Anymore.
Speaker 3 (32:15):
I wonder if both of you. I'm looking at our
market's live blog and our macro strategist, one of them
writing that the headline is a beat, but it was
driven by advertising where revenue rows eight and a half
percent from a year earlier. That's not going to help
the rest of the Magnificent seven very much. Mark, you
have any thoughts on that, because we are getting ready
to have all of these names and numbers and results
(32:36):
coming at us, and we know investors love to know
what the mag seven are doing.
Speaker 6 (32:39):
Well, I think it indicates that Q one was a
healthy environment for Google and likely for other companies, especially
in tech. I think they question on Q two very
valid question fall investors, But I think for Q one,
I think maybe people are mixing these quarters together in
their mind. Q one solid for Google, guessing is probably
(33:02):
educated guess solid for these other big tech stocks.
Speaker 4 (33:06):
Also.
Speaker 3 (33:06):
All right, Mark, we're going to leave it there with you.
Thank you so much, So good to check in with
you once again. Mark Douglas, President and CEO of Mountain
joining us from Miami. Your thoughts on that, man deep
in terms of what's to come. I mean, there's alphabet
and how they make money, and then there's the rest.
Is there any assumptions we can make or not? Really,
they're all kind of different.
Speaker 6 (33:26):
Yeah.
Speaker 8 (33:26):
I think after the call we'll have a better sense
of how they are viewing the environment. I mean, the
whole thing about Chinese advertisers pulling back, and Alphabet in
general has a broader swath of advertisers on their platform.
When you think about Meta, even though you know it's
duopoly and Meta probably is more skew towards I would
(33:49):
say retail, and yeah, it doesn't have as much autos
exposure as Alphabet has, so there is some nuance with
regards to their advertiser base. Would say Alphabet is more diversifying.
So if Chinese advertisers are pulling, that will hurt metamore
for sure.
Speaker 5 (34:06):
Alphabet doesn't give guidance. So what do investors look for
on the call to understand the current climate. Well, so
CFO commentary, I mean, is there anything there that could
move the needle?
Speaker 8 (34:18):
I think whatever they say around chat, GPT and LLMS
and just overall color around competition, because this is the
first time everyone cares about, you know, comments related to search.
I mean, up until two quarters back, it was like Oh, okay,
Google is a monopoly. Everyone knows that at pricing may
(34:39):
go up and down depending on the cyclicality of the economy.
But now the competitive threat is real.
Speaker 5 (34:45):
But the competitive threat's the competitive threat with AI and lllms.
What about the just the idea that if it's an
economy where there's uncertainty, marketers pull back from advertising. That
would hit this company very hard.
Speaker 8 (34:57):
Yeah, but I think what they showed in the is
ad pricing actually rent up.
Speaker 7 (35:02):
For the first quarter.
Speaker 4 (35:03):
For the first quarter.
Speaker 7 (35:04):
This is not the second quest.
Speaker 8 (35:05):
It's not gonna again. If you think about online ads,
Google is the last place where advertisers will pull back
because it's the highest ROI out spend.
Speaker 5 (35:15):
You you get you actually you pay for what you get. Essentially, yeah,
you're not buying it.
Speaker 8 (35:20):
If you're looking for customers online, Google is still the
best place because it's the most effective. Remember, they collect
data from eight apps that you're interfacing with, and that's
why the ad is so targeted. Google Metal also has
four apps, but then Google probably has more data about
you in terms of targeting you.
Speaker 7 (35:39):
That's why they're so effective, right.
Speaker 3 (35:40):
Really specific data right of exactly what you are doing
to instent of it on any given No, that's why
I don't understand why they're showing me the car searches.
Speaker 7 (35:48):
But I don't know why they keep showing me cars.
I'm not buying cars.
Speaker 3 (35:51):
No, it's really fascinating, Men Deep, Thank you as always always,
Men Deep saying, of course, senior tech industry analysts with
our Bloomberg Intelligence team, shares off a bit, folks, up
about three point nine percent in the aftermarket, definitely off
its best levels of the day. Sales beat estimates on
Google Search advertising.
Speaker 5 (36:08):
Yeah, in just a few minutes, we're going to be
speaking to Ed Ludlow on Intel because shares of Intel
in the aftermarket down six point three percent.
Speaker 2 (36:15):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
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or watch us live on YouTube.
Speaker 5 (36:29):
Well, shairs of Intel are selling off in the after hours,
down right now by about five point three percent. It's
attempting this comeback under a new CEO, lit Bhutan, and
it gave a week forecast for current period. Also said
it's cutting workers to bring costs in line with the
business's smaller side. With more on Intel, we head out
west to talk to the co host of Bloomberg Technology
at Ludlow, who caught up earlier with Intel's CFO to
(36:50):
talk about the earnings and the outlook. He joins us
from the Bloomberg San Francisco News Bureau. What did you
learn ad from Intel's CFO.
Speaker 3 (36:58):
Yeah, I think quite a lot.
Speaker 9 (37:01):
Intel is still very far from where it wants to be,
from where its customers want it to be, and the
only way to get there is to readjust the makeup
size of the workforce and also you know, look very
closely at the balance sheet, and so like the major
step that they're taking is pulling back on op X
(37:21):
and CAPEX. They confirmed our reporting that there is going
to be layoffs frankly, and that that thos layoffs are
going to be in middle management. But it's really a
story about a company that has a new CEO who's like,
you know what, we are going to just get focused
on technology. Although you know, as I said that, you've
(37:43):
got a bit of sense of deja vous, because that
was kind of the story the last time we had
a new ZEO.
Speaker 5 (37:49):
I was going to how many years have we been
talking about a turnaround at Intel?
Speaker 9 (37:53):
Yeah, so I was just wanting and king about Bloomberg's
and king about this. It's like, what is the single
head line on Intel, what is the new focus and
where are they going to pull back? You know, Pat
Gelsinger really wanted Intel to be a contract manufacturer to
the world, right do what TSMC does alongside having its
(38:14):
own products. Bhutan has just sent an email to employees
this afternoon that we've seen and read and basically reading
between the lines, I think that that is not a
priority for him, the contract manufacturing bit. I think he's
acknowledging and Dave Zinzna went through this on the phone
with me that customers want one thing right now right,
(38:34):
which is AI accelerators, high performance GPUs or AI chips
that are involved in the training and inference stages of
large language models and AI models. And Intel's just not
been at the races there. So materially, what they're doing
is they're cutting out middle management. They're going to rehire
better people in the engineering space. And you may have
seen a headline on the terminal just a couple of
(38:56):
minutes ago they're going to make people come back to
the office four days a week, which is interesting because
like they're kind of late to do that in all
the names we cover here.
Speaker 7 (39:04):
Wait, so they haven't been coming to the office four
days a week.
Speaker 3 (39:08):
Is this the recipe for making Intel again a dominant
chip player?
Speaker 4 (39:14):
I don't.
Speaker 9 (39:15):
I don't want to confuse our audience. But basically, in
the history of Silicon Valley and the world of technology,
Intel is at its origin. Right when we think about
the early days of semiconductors and the cutting edge of
semiconductors and an annual cadence where technology got better, Intel
was like the leader there and for a long time
it has not been. It has fallen away. And you know,
(39:37):
Zinzna when we was on the phone with me, and
you know there's a reason that zins and the CFO
was on the phone with me, right lit Bhutan is
very early, it's just been at the company a couple
of weeks. But they are trying to address culture. They
think that basically that the culture that needs to be
there to be like roofless and win and get ahead
in the world of technology is not in place. And
so yes, there will be a reduction enforce that will
(39:59):
target middle MA, but I was surprised as anyone to
see that part of that strategy is getting people to
come back to offices, not just here in the valley
but around the world.
Speaker 5 (40:08):
Is the reporting that the Bloomberg News team did earlier
this week around the layoffs that was confirmed today are
those we discussed?
Speaker 7 (40:17):
It?
Speaker 5 (40:18):
Are those numbers consistent with what we learned today publicly
from Intel.
Speaker 9 (40:22):
So what Dave's inside of the CFO said to us
on the phone was, I'm paraphrasing, but it was an
interesting number because I don't quite have one yet myself.
Speaker 3 (40:35):
But the reason he doesn't is.
Speaker 9 (40:37):
That he knows what the opex and capital expenditures targets are.
Now those are firm, right and you guys may have
gone over those on air, but they've reduced op X
and CAPEX for the full year CAPEX by about two
billion dollars, and then op X came down a similar
amount as well. And from that and knowing where in
the ORG they're going to cut middle management, Dave knows
(40:58):
what the end goal is, but he said, I don't
have a percentage of overall workforce net what the layoffs
will be, but they were confirmed there will be a
reduction in middle management. And you know, the quote was
very simple that they are going to cut out the
bureaucracy that currently is in that company as well.
Speaker 3 (41:17):
So the CEO saying in a statement, I'm taking swift
actions to drive better execution and operational efficiency while empowering
our engineers to create great products. We're going back to
basics by listening to our customers and making the changes
needed to build the new Intel. So it's top customers, Dell, Lenovo, HP, Microsoft, Amazon,
What do those customers want? What do they want from Intel?
Speaker 9 (41:41):
They want better products that where the technology can do
better things. And on the phone, Dave was pretty forthright
in saying that trust with their customers is not really
in a great place at the moment. You know, Bhutan
in that statement you just referenced, said that a lot
of their problem right now and the reason that he's
going to have to take severe action is due to
(42:03):
prior actions the company has taken. And I think he
was of course talking about the last leadership team. You know,
the story of Intel is the stockstown five percent right,
well almost six percent. We should like be clear that
things have not improved, and you know, nor would you
expect them to. It's only been a few weeks that
the new CEO has been in place, but you know
they beat in the first quarter where very simply there
(42:25):
was a pull forward. Right those customers you just listed
ordered chips in advance of tariffs coming, and hence the
outlook for the current period is not great because they
took from what they would normally order now into that
first quarter, and the second quarter is not great.
Speaker 7 (42:39):
You know.
Speaker 9 (42:40):
So there's a lot that needs to be done here.
Designing and building cutting edge chips is what they plan
to do.
Speaker 7 (42:47):
Can I talk about William with Ed?
Speaker 3 (42:49):
You could do whatever you want. This is America, you
can do it.
Speaker 7 (42:53):
Ed's been riding in these forever. You know.
Speaker 5 (42:55):
It took me to my last I guess a couple
of trips ago to San Francisco to do this.
Speaker 3 (42:59):
I guess it change man, change myself road in a WEYMO.
Speaker 5 (43:03):
But Romaine brought this idea up on the close that
you know, it's in the other bets category of alphabet
and there are you know, questions about how much these
vehicles cost. What is the current valuation. You've written about
this a few months ago. What is how is WEIMO valued?
Speaker 7 (43:17):
As a business.
Speaker 9 (43:18):
I listened to your conversation with the clothes anchors and
with Mandeep as well. Astonishing what you guys got through
that Weimo what we reported in its most recent private
funding rounds forty five billion. But there are a few
things that I think remain. In particular, I'd love to
discuss this with Weimo has outside investors, and it is
a material hardware company that's very different to Chrome. Yeah,
(43:43):
you know what Romain was talking about is the valuation
that that Chrome was assigned in the course of this
antitrust trial. That fifty billion dollar Chrome valuation was given
by the Duck Duck go CEO. But at the core
of Chrome is that it's underlying technology is open source.
So Microsoft's Edge browser is made of the same code
base that Chrome is. They're they're not apples to apples.
(44:05):
But he is right in the long term, like Waimo
has a viable teacher. Many would think it's just that
like that is far away, it is super far away.
Speaker 5 (44:15):
Well appreciate you joining us, great perspective. Ad La Low,
co host of Bloomberg Technology in San Francisco.
Speaker 2 (44:21):
This is the Bloomberg Business Weekdaily podcast, available on Apple Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot Com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
Speaker 1 (44:39):
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal
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