Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Intelligence with Alex Steel and Paul Sweeney.
The real app performance has been in US corporate high yield.
Are the companies lean enough? Have they trimmed all the fats?
The semiconductor business is a really cyclical business.
Breaking market headlines and corporate news from across the globe.
Do investors like the M and A that we've seen?
These are two big time blue chip companies.
Window between the peak and count changing super fast.
Bloomberg Intelligence with Alex Steel and Paul Sweeney on Bloomberg Radio.
On Today's Bloomerg Intelligence Show, we dig inside the big business stories impacting Wall Street and the global markets.
Each and every week we provide in depth research and data on some of the two thousand companies and one hundred and thirty industries our analysts cover worldwide.
Today, we'll look at why Apple is investing five hundred billion dollars in the US over the next four years.
Plus, we'll discuss how the global reach tell giant Walmart is navigating a second Donald Trump presidency.
First, we begin with big tech and the chip giant and video This week and Vidia reported good but not great earnings.
The company also warn the gross profit margins would be tighter than anticipated as it rushes to roll out a new chip design called Blackwell.
For more on this, we were joined by Gene Munster, managing partner at deep Water Asset Management.
We first asked Gene for his take on Vidia earnings.
Well, the results were good but not great, And specifically is the margin guidance at seventy one percent versus the three to seventy two and there weren't a whispers that they were going to lower margins. I think that really stood out to me. The upside on revenue a billion compares to the expectations of like a billion and a half to two billion, and so I think that these were good in the sense they did raise on revenue,
but not great effectively. What they're doing is pushing the ramp to the back half of the year, especially on margins. That's when the margins they said to kind of go to seventy five percent. And I would add one other piece to this is going into the print. I believe that the most important point was related to commentary about how sold out they were on Blackwell. This is a metric that they typically give and last quarter they said they were sold out. For basically three quarters of this year,
they were radio silent on the topic. They surprisingly didn't get asked a question on it. But I think that Jensen's comments about the need for compute being one hundred to one million I double checked that on the transcript. One hundred to one million times more compute needed for reasoning and physical AI and robotics AI. That increase in compute, I think gave investors some optimism that, well, this year might not be the year that twenty twenty six is
going to grow faster than what people think. And so set a different way is that the results and guidance don't give a ton of optimism. But if you look at where this ultimately could go, if you take what Jensen is saying right to buy ten, that means they're still going to comfortably beat the numbers next year.
Okay, there's a lot of unpack with that. So let's go back to gross margins for a second. Based on their call that gross margins will hit seventy five percent in the back half of the year, when do we think they're going to bottom?
So they got answered the guess that question on the call, and they kind of sidestep it, but if you read between the lines, they probably go lower again in the July quarter. So there's an April quarter that we're in right now than they go to the July quarter. My guess is they probably bottom then at around seventy percent, So effectively going from seventy to seventy five over six months,
it's a pretty big jump. At the time of the call, the stock was up two percent in after hours when they came to the last question on the call, which was related to that ramp in margins and how realistic is that if we have more export controls and the answer was, we don't know how export controls are going to impact our business, And immediately the stock went from up call it two percent to down a half a percent.
We saw basically two percent move in it, and so I think that speaks to investors saying like that's that's a risk here is like are we really going to get to that margin ramp we talked about the seventy three percent margins for a tech company, for a hardware company. I think at the end of the day, they're still remarkable. But for these stocks to keep working, you need to
have margins at a minimum stable and growing. And I just want to put one final thought on this Alex is that ultimately I think margins will get back to that seventy five percent. I don't know if it's going to be in Q four early next year, but if the ramp is what I think it's going to be for next year, I think we're going to get back to some go go days and video.
Geene, the driver for this stock tremendous performance over the past two years has been beaten and raised by a certain order of magnitude. If for no other reason than the law of large numbers, that order of magnitude likely will be lower. Can this stock continue to work with the law of large numbers not giving in that two three four billion dollar beat and raise every quarter?
I think it can. And just to put in perspective, we've gone from a twenty billion dollar business a few years ago. It's going to be about a two hundred billion dollar business this year. But there's still our companies apples a four hundred billion dollar business. I mean, you can still continue to grow from that, and it doesn't need to have that breathtaking growth. And I would come
back to the central question here. It's not about twenty twenty five, it's the twenty three percent growth in calendar twenty six, and do you think that the number is going to be higher or lower than that? And ultimately
I think the number is going to be higher. I think we're going to get back to a point where we, despite the law of large numbers, we get to some of those improving, those improving upsize and beats, and it just comes down to what I think is a large tam and what I still believe is a competitive advantage that GPUs have over custom silicon, and we'll see how that plays out. But that's essentially the debate that's going on right now is just how much compute you need
and how defensible is Vidia. I think there's a boatload of compute, much more than we realize it's going to be needed, and I think in Videa's in a great position related to that. We're going to have to wait to get to those results, but I think anticipation of that is going to be positive for the stock at some point this year.
Our thanks to Gene Mounster, managing partner at deep Water Asset Management.
We moved next to the Energy sector. This week, we looked at the energy technologies company American Superconductor Corp. It's NASDAK ticker is AMSC.
The firm specializes in using superconductors for the development of diverse power systems, and the hope is to meet the world's demand for smarter, cleaner, and better energy.
AMSC also recently reported third quarter earnings and said it's revenue grew fifty five percent from a year ago.
For more on AMSC, we were joined by its CEO, Daniel McGahn.
We first asked Daniel to describe what is company actually does with regard to power.
We don't really make the power move the power, but we make sure that the power is where it is when it's needed.
So what does that wind up meaning so you can tuck to the electricity basically.
Yeah, So if it's an industrial site in the manufacturer that needs power at a certain level, certain frequency, we modulate that and make it the right way for that factory. Same thing if you're trying to deal with bringing generation onto the grid or even different spots within the grid itself, to bolster and make sure that the power can go where it's needed.
All right, that sounds critical sounds important, but it doesn't sound sexy. Are you guys getting caught up in that AI and the need for energy?
And I don't. Yeah, I think we're getting caught up in the need for energy. I think there's a lot of drivers that are changing our need for power. If you think about everything you do in your day now requires electricity, and that can be from healthcare to data to semiconductor manufacturing and everything in between. So power it becomes more and more critical. We're becoming more dependent upon it. And the grid really wasn't built for the modern era of electricity.
And from that perspective, I mean just for a super nerdy moment. You guys also make the conductors, right, like the thing that so if you have a wind farm and you need attached to a grid, there's like a piece of equipment that you need to attach it. You make those and those are in super super soon tight demand like tons of demand, not on a supply, doesn't matter what kind of power source that is. Am I accurate?
Yeah, And many of the suppliers are from overseas as well, So we're kind of unique also being in an American company making product in America with Americans and I think that fits very well in today's climate where we're trying to push the country.
What are the drivers for your company right here, right now? I know you've recently reported earnings of what did you identify as the drivers for your business?
A lot of it is this further in the need for demand. A lot of it we're seeing our business start to really with the reshoring of manufacturing capacity and capability in America. All those operations need power, so we see expansion in manufacturing that's starting to happen critically in these critical elements if you want to deal with cars and chips and AI and all those things. We sit kind of secondarily that we help enable the power to
be there. But more and more operations are becoming more dependent upon electricity.
So from that perspective, does it matter to you where the electricity comes from? In that is the policy from a Biden administration and transition to a Trump administration on say energy and climate, does that matter?
Well, I'll say something that may not be popular, but I'll still say that I think that the end result and desire from both are the same. We want to make sure that we're building an economy in America for Americans. I think that was consistent with the last administration. It's definitely consistent with the current administration. The question is the
policy and how how do we help enable it. Are we trying to create a market that people want to companies want to invest in, or is the government trying to help foster that through money and through policy that is more economic. At the end of the day, for us, it doesn't quite matter. The problem is still the problem. The grid needs to be improved. Utilities are working on that, but as more manufacturing capacity comes online, there's need for higher quality power and that's where we come in and
help solve those problems. Who do you compete against? A lot of the big guys from your and what we found is that be like Semens, It could be Semans or ABB locally here in the US a small company called General Electric. But what we've found is over the past several years, our largest competitors have become very good customers.
And what we found is what we offer, the uniqueness of what we do and the service that we provide, it complements their offering and I think they're starting to understand that we're not really a threat per se to their business. We're a helpful solution to.
The end customer.
What inputs do you need for your business? So? What things are tight for you? What things do you want to help change?
When you say inputs, I think supply chaining.
That's what I'm and that's what I'm trying to get at. So is it like the raw materials that you need to build stuff in the US to themselves?
Yeah, almost everything that we make in the US, so probably eighty five percent of our businesses here home in the US manufactured here. Almost all of our supply chain, probably more than ninety five ninety six percent is sourced in the US. So the current applimate really puts us in a unique opportunity that we may have unique opportunities presented to us because we are American, American, made by Americans,
supplied mostly by American suppliers. When people talk about tariffs and these kind of external policies, they don't have a great impact on what we do now. They may. I don't know how things are going to sort out. There's a lot of rhetoric and then we'll see how reality translates from that reetarc and really what gets put in place. But a lot of this is trying to push the country in a certain direction, and I think that general direction is good for us.
So are you having conversations with your customers now? They may be calling you them saying, hey, Dan, we're a little nervous about what might be happening over the next three, six, twelve months in terms of tariffs. Are they Are you seeing that in your order flow or are you seeing that maybe just in conversations you're having.
We're seeing that from companies in Canada, Mexico, We're seeing that to some extent, some companies on the continent of Europe, but certainly in the US they're comforted by the fact of where we make it and how we make it and where we source broughduct from.
Some of the headlines over the last couple of days have evolved around tariffs on things like aluminum. Copper was thrown into the mix yesterday. If that winds up denting demand as and we're not going to build as much manufacturing or industrial sites because it's just really expensive, how does that trickle to you?
Well, I think the opposite's going to happen. The need is going to persist. The question is can it absorb the cost and there's going to have to be a way to figure that out and find that out. But I think all of the things that go into the electric grid use all those materials, so they're going to have to get sources. And if it makes American sourced
product more competitive, then so be it. From my standpoint, it doesn't directly affect us because we're already sourcing most of our principal equipment from the US.
Our thanks to amsc CEO Daniel mcgahann.
All right, coming up, we're going to break down why the coffee giant Starbucks is cutting jobs across it's corporate ranks.
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies and one hundred and thirty industries. You can access Bloomberg Intelligence VfB. I go on the terminal.
I'm Paul swinging anmlex deal. This is Bloomberg.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
We moved next to news from the coffee giant Starbucks.
This week, the company announced that it's eliminating eleven hundred corporate jobs.
The move by Starbucks has aimed at increasing efficiency and revitalizing the company for more.
We were joined by Michael Halen Bloomberg Intelligence senior Restaurant and food service Anaallygics.
We first asked Michael what he thinks of this week's news.
Well, you know, every situation is a little different. You know, I did a lot of TV and radio last year when Brian Nichol was hired, and you know, I said he's going to instill a culture of transparency and accountability and if you're not adding value, you know, you're probably going to be shown the door. So this is really not a surprise to us. It's not a surprise to the street. It was communicated back in January. And you know, we've seen a lot of senior management changes as well.
You know, this was a company that was performing pretty poorly under the previous management team. I'm sure there was plenty of deadweight in that large company, So not really a surprise here.
What about them cutting all the drinks, like all the stuff my daughter likes to order and I was thinking, I joke, but really like, she's not gonna want anything from Starbucks now, and they're no longer training her as a ten year old to then come into Starbucks as they get older.
Is that a bad thing?
Not for me, but I'm guessing for Starbucks maybe.
Well, you know, I think what they're trying to get back to is what made Starbucks great. How did Starbucks get to be you know, tens of thousands of stores globally it was it was really by through the espresso, drinks, through a great in store experience where the barista knew your name right, and and so they're trying to get back to a lot of those things. You know, they're they're looking for that that core. Guess that's that's coming in there multiple times a day and providing them a
great experience. I think that's a that's a smart path forward.
Mike.
You cover the whole restaurant space here. You see the different price points. What are you seeing out there? How's the consumer doing? From maybe just the data you see about restaurant activity.
Yeah, so last year was a restaurant recession. You know, we think things will be a little bit better here in twenty twenty five, but it's been choppy kind of to start the year. And a big problem has been this cold weather. January was the coldest, you know, the oldest January in like fourteen years, I think in the United States. There was a significant amount of snow throughout
the United States in January and February. So there's been a lot of closed restaurant days, and so it's been a choppy start to the year for the restaurant space. You know, we think it's going to be better than twenty twenty four, but you know, we don't expect the gang Busters year, mainly because of inflation still continuing to crimp low income consumer spending.
Yeah, and also you know, for example, coffee prices are really high. Egg price is still really high. Like those things are pretty sticky. Going back to Starbucks for a second, So the CEO, Brian Nicol, took over in September as sales were declining. Obviously he's formerly of Chipotle. Do we have this playbook from Chipotle and then how it's being implemented, say into Starbucks, and if so, kind of where are we in that.
Yeah, it's it's a little bit different but similar, right, it's it's going to be number one. It's going to be about nailing the operations, and they've worked hard to make the jobs easier for the barises. You know, part of the reason why they're not offering your daughter's favorite drink is because they were difficult to make, right, and it's because the barisas really didn't personally want to make them.
They added labor hours into the into the cafes to help boost operations, right, and then from there it's it's been spending more on marketing. This company has on invested for a very long time on marketing, and now you know they've been able to do that. They sell an item that's pretty addictive, caffeine, right, but they've under invested in marketing for a long time. And Starbucks is starting
to push the gas pedal on that. And it's they're saying, it's they're starting to see better transaction data in the US and we're starting to lap some really weak results from last year, and so you know, I think they're going to start to see some momentum on the top line here before Starbucks, especially in the United States.
All Right, Thanks to Michael Hale and Bloomberg Intelligence Senior restaurant and food service analyst.
We moved next to the news from the tech giant Apple. This week, Apple said it we'll hire twenty thousand new workers and invest five hundred billion dollars in the US over the next four years.
This comes as Apple seeks relief from President Donald Trump's tear off some goods imported from China.
For more, we were joined by Mark Derman, Bloomberg Chief correspondent on Global Technology.
We first asked Mark how this news came about from Apple.
During the first Trump administration, Tim Cook other companies were obviously very worried about tariffs, right, and so their strategy was, we can try to make a deal here. What does Trump want? Trump wants his supporters to know or see that he's bringing jobs back to the US, bringing money back to the US, bringing manufacturing back to the US. Apple doesn't want tariffs on the phone, and it wants to keep as much phone manufacturing in China as possible.
We don't have to get into the reasons why there's a ton of them. Okay, So you have these two sides, right, there is a universe in which both parties can get exactly what they want. It's like a trade right, and so you saw that strategy in full form Trump for months, obviously, the secondministration has been talking again about bringing back jobs, has been talking again about moving things to the US, has been talking again about extra tariffs some goods from China.
Aple comes out with the press release We're investing five hundred billion dollars in the US over the next four years, which, by the way, that's.
Trump's term, right.
He just started, Okay, twenty thousand new jobs, AI server manufacturing, Fox con in Houston, doubling our manufacturing fund from five billion to ten billion, setting up a manufacturing academy like a school in Detroit. So you ask yourself, what's really going on here. They want Trump to know that they're investing heavily in the US, and since we're doing that, we don't want tariffs. And so the spin to Trump is that we're doing this because of you. The reality
is somewhere in the middle. The reality is that Apple has been investing as part of its business operations in the US from the very beginning. The reality is in twenty twenty one, Apple announced the four hundred and thirty billion dollar investment in the US. The reality is that Apple hires four thousand R and D employees year in the US anyways, So what's actually new here? To be fair to both Trump and Apple, there is a bit of an acceleration. So their typical spend on the twenty
twenty one US Investment Plan eighty six billion dollars annually. Okay, the new plan one hundred and twenty five billion dollars a year annually. So you're getting a forty billion dollar Trump under Trump, and you're moving from four thousand people on the R and D side hired annually to five thousand people. So incremental, sure, but definitely an acceleration.
Okay, one minute, is there a quid pro quote here?
Do you think Apple actually already has a deal with President Trump that they will be exempt from tariffs?
No?
Okay, But Tim Cook went to Donald Trump's office last week and presented this to him, said, we're going to do this because of you man. Oh and by the way, we don't want to pay tariffs. And Trump knows that Trump doesn't care about giving Apple or a prieve on tariffs. He's happy to do it, and he's happy to do it and tell people that he did it because Tim Cook is investing half a trillion dollars during his presidency. He can go back to his supporters, his base, he
can go back to Congress. He can go back to the world and tell them that the world's biggest technology company, the most famous company in the world, is investing half a trillion dollars. It's biggest investment commitment ever, right because of me and for Trump, that's awesome.
Yep.
And for Tim Cook not having to pay tariffs is awesome. And I think that's good enough to get some sort of tariff for Prieve. And by the way, let's say Trump doesn't give them a tariff for Prieve. Who cares? Right, I was doing this anyways if I'm Tim Cook.
Thanks to Mark Derman, Blueberg Chief correspondent on global technology.
We move next to earnings from the home improvement retailer home Depot.
Home Depot said it expects a key sales metric to return to growth this year, and this comes despite the company cautioning that housing the man won't change significantly in the near term.
For more, we were joined by Drew Redding, Bloomberg Intelligence US home building analysts. We first asked Drew for his take on earnings.
It was a good quarter for them. Comp sales were positive for the first time in eight quarters, so I think that's something a lot of people are latching onto
on a positive indicator moving forward. You know, we came into the quarter thinking that they could do a little bit better than consensus on the comp line, really because of some of the positive data we've been seeing coming through in retail sales, along with the expectation that some of the recent hurricane activity would benefit them, and that's something they called out. They had about a two hundred million dollar benefit from hurricanes, which is about a sixty
five basis point lift to comp sales. The guidance was pretty positive. They're looking for about one percent growth next year, which we think is appropriately conservative, and it's pretty much in line with what we've heard from some other players in the home improvement space who are looking for the market to be flat to modestly hire next year. There's really no incentive for them to come out be overly optimistic for next year, given you know, the struggles we're still seeing with housing.
I was struck by the fact they said they are seeing more refis does that mean that people are going to refly to then spruce up their house.
Yeah, I mean in order for this industry to see more normalized growth going forward, that's something you're certainly going to need to see, is people tapping that home equity undertaking larger scale renovations. It's still one of the areas that's kind of holding back growth. They cite it, you know, kitchens and baths as a particular area of weakness, and
the reason is because those projects are typically financed. So while they did mention that they saw a little bit of improvement, it's still nowhere near you know, what the industry would need to see in order to get more robust growth going forward.
Hey, Drew, it may shock you to learn that I spend very little time in either Home Depot or a Lows. How does the street different shape between you too? Because I'm look at the stocks over the last five years they both up, you know, eleven, twelve, thirteen percent on a compound of basis to this, I'm sureholders are on HD. Do they own Lows as well?
How do you differentiate?
Yeah, So the main point of differentiation between the two is really their customer exposure. You remember, home depot is about fifty percent DIY fifty percent professional contractor, whereas Lows is about seventy percent DIY thirty percent pro customer. You know, as we look forward, we think that the primary engine of growth for the industry is going to be from
professional contractors. As you start to look out ahead and you do see people tap that home equity, we think that's where a lot of the growth is going to come from. You know, for Lows, as I mentioned, they've really been focused on DIY, but over the last couple of years, they're starting to transform their business to cater more towards that professional contractor because I think they realize that's where the growth opportunity is now for for home
depots specifically. You know, their strategy is to go after an untapped two hundred billion dollar market for more complex pros, which are those looking at you know, larger scale remodeling projects that span a lot of product categories, and they want to con and solidate those contractor vendor relationships so they could become the one stop shop.
So if lumber is such a big part of these businesses, what are they saying about tariffs? If I would guess they get a lot of their lumber from I don't know, Canada.
Yeah, surprisingly, it wasn't really an emphasis of the call home depot and Lows are among the largest importers of goods as you would expect, but over the last several years, I mean, the point is really that since the last time this administration put larger tariffs into place, they've really diversified their supply chains out of some of the markets
that are most in dependent, like a China. Now a majority of their products, the costs of good is still sourced domestically, but they certainly do have exposure to China and some other markets, and we would expect to see somewhat of a margin impact, you know, as these tariffs continue to go through.
Our Thanks did you're writing Bloomberg Intelligence US homebolding analyst coming up on.
The program and look at how Walmart CEO Doug McMillan is navigating a second Donald Trum presidency.
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies and one hundred and thirty industries. You can access Bloomberg Intelligence via b I go on the terminal.
I'm Paul Sweeney and a'm alex Deal and this is Bloomberg.
You're listening to the Bloomberg Intelligence Podcast. Catch the program live weekdays at ten am Eastern on Applecarplay 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 Play Bloomberg eleven thirty.
We move now to investor Warren Buffett's multinational conglomerate Berkshire Hathaway.
The company recently said it's fourth quarter earnings were about fourteen billion dollars, higher than analysts expected. Berkshire also said that it has more than three hundred and thirty four billion dollars in cash, a record high.
For more. We were joined by Matthew Palazoa, Bloomberg Intelligence Senior analyst for P and C Insurance.
We first asked Matthew what some of the highlights were from Berkshire's earnings report.
Big earnings jump from the year ago due to their most exciting and best business in my view, the insurance business.
There.
We've been probably talking a while about auto insurance prices going up, and that is really showing through in the results of auto insurance companies like all Stay, Progressive and Geico at Berkshire. So that was one of the big drivers. Another one was their investment income. So they've been selling a lot of stock, as you said, their cash pile which is three hundred and thirty four billion dollars going up and up, and the investment income on that has rose dramatically as well.
So how much cash does he have now?
So three hundred and thirty four billion in cash, that's just cash.
It's my tiny little brain.
Yeah, good problem to have, right, you're going up? Yeah, I mean, and what has.
Happened is O can you imagine? Put that in a mark? Is fun? What you're throwing off?
Sure, they're getting about eleven billion dollars in investment income a year just on their fixed investments, and that's incredibly short term you know T bills.
Right.
The reality is the problem, if there is a problem, is and it's been this way for years, and there's just nowhere to put that money. I mean, to find something of that scale is almost impossible.
Yeah, he talks a lot about that that there's not much they can do to move the needle on results. They bought Allegheny a couple of years ago. That was thirteen billion dollars they've put I don't know the exact number, but several billion into these Japanese trading house investments, so they've been putting money to work. But none of those
really moved the needle. And they sold a ton of Apple stock they sold in the fourth quarter, particularly, they sold a bunch of Bank of America stock, which we knew was going to happen, So there weren't really any other surprises as far as stock moves. They bought Constellation Brands, which you know makes beverages. I don't know all that much about them. They put about a billion and a half to work at that, so we So what.
Does Warren Buffett say about the market being overvalued or not? And what does he say about say AI trade?
Probably not much. He didn't say, you know, nothing that I've heard, you know, Warren Buffett and interviews or anything. We've got the annual meeting coming up in May, so he probably I would be shocked if he doesn't get one question on AI at least at this point. You know, they're not huge investors in tech names, obviously Apple notwithstanding the investment managers might be more interested in stuff like that,
and he does. He had said in his annual letter, it won't be long before greg Abel's the CEO, so he kind of always acknowledges that and kind of more building towards the future.
So if I'm buying BRK today, Berkshire Hathaway, what's my investment theme.
It's tough because in the earnings I didn't see a lot of things that were, you know, telling me, oh, this is these are positive signals for the future earnings of Berkshire. Necessarily, Berks's got a huge retail ownership, so there's kind of some of that moves it. The fact that the earnings beat by a lot didn't impress me.
You know, we knew about Geico improving. They also had a lot of insurance favorable loss reserve development, which means they sell the business, their claims come out later, so they don't know the claims what happened as their claims turned out to be a lot better. But in the third quarter they had adverse development. So the things that pushed their earnings were not too impressive. The operating businesses like the railroad had a one time comp expense in it.
It seems to me like earnings probably will not grow in twenty five just because of these items and insurance and even the other underlying businesses, it'll be modest, if much growth at all.
So because I'm me, I'm really into a warm Buffett's steak and Oxy. So it's an oil company, but they're also doing a lot of director capture and which basically you get carbon out of the air and you put it in the ground. But the reason why he has a stake that he continues to build. But originally it was when Oxy was buying in a darko and they needed some funding and they needed it fast, and so we got a sweetheart deal. The rumor always is that, oh, he's going to buy the company.
So he flat out said, I'm not looking to buy the whole company. I think it was at the last annual meeting and I was writing the day before, maybe they'll Buyoxy so and then he came out and literally threw cold water on it. They did buy more stock in the fourth quarter and the first quarter, and like you said, Alex, he made a very typical Buffet deal, like this is a company that desperately needs cash, We're
going to get a great deal from them. But he has repeatedly talked about the management of the company and how he likes how the positions, so I don't think it was you know, it wasn't just taking that sweetheart deal. He does like the forward look of the company. Also, Greg Abel, the future CEO, is an energy guy, so I assume he played, you know, a big role in that whole deal.
What about this Able guy?
Do we like him?
We've not had a few years to get the nome ring.
I think we like him. We don't know a ton honestly, Like Buffett has him with him in interviews, he has in the annual meetings. He will be there again, I think from they'd said it in the report, he'll be there for I believe most of the time with Buffett. Mostly what I'm going on is how Buffett talks about him. Talks about him in terms of capital allocation, you know,
and he always praises his managers. One thing I think you could point to is that Able has taken over a lot of the day to day So a lot of the managers of the company's Berkshire owns call Buffett and he's kind of nicely gently passed them on to Able. So you know, if things are going well, they're probably going well due to greg ables effort all.
Right, thanks to Matthew Palizola, Bloomberg Intelligence, Senior Analyst for P ANDC Insurance.
This week we focused on a Bloomberg Big Take story entitled Walmart Wants to be Something for Everyone in a Divided America. You can find it on Bloomberg dot Com and The Terminal.
The story looks at how Walmart's CEO Doug McMillan is navigating a second Donald Trump presidency while going after Amazon's e commerce crown.
For more, we were joined by one of the stories authors, Devin Leonard, Bloomberg BusinessWeek's senior Global Business writer. First asked Devin about how Walmart is trying to position itself today.
Well, I mean, it's it's a really interesting time to be doing a story about Walmart because it's Doug McMillan's I guess it's just a little past his first decade, and he he took the company through through this transformation. Just I mean, you know, when he came in twenty fourteen, they were just you know, considered it in that clueless. They were behind not just Amazon but eBay and Apple, and you know he sort of turned them into you know, an actual you know Amazon rival, you know, at least
they had a future. So now he's trying to do you know, you know, trying to turn it into into sort of more of a real tech company with its big, expensive campus and also you know all of these you know, not just Walmart dot com, but you know, a marketplace for a third place sellers, you know, you know, you know,
online advertising and all those things. And of course, as you pointed out, he's trying to do it, you know, all at a time when when Donald Trump's come back, you know, you know, to you know, to Washington and you know, you know, you know, very aggressively pursuing you know,
the second term term agenda. So so, but you know, they're trying to hold on to their to their you know, I don't want to say downscale customers, but their core customers, while you know, reaching out to you know, up upscale customers, you know, primarily online and also navigating you know, tariffs, you know and all that stuff, but also and also kind of moderating his his sort of political positions or
you know, positions on socialations as CEO. As we've seen in the last couple of months, rolling back DEI basically not being as critical as Trump, you know, as he was during Trump's first administration. So you know, it's a it's a difficult kind of balancing act, but that's what he's trying to do well.
Also in the piece, you guys talk about their opening of the three hundred and fifty AC or Walmart campus. The pictures are amazing. It's not yet done, but they have like a fitness center, they have meditation rooms, they got pickleball cords, shops, restaurants and brewery like.
What now, Well, that's I mean, it was it was pretty It was pretty fun, you know, I mean, just the whole town and has changed a lot thought. I mean, you know, Jay One had actually been there a couple of times, when more recently because she covers walmartel all the time. The last time I was down there was two thousand and five when I wrote a cover story for one of our competitors about Fortune. But sorry about Fortune. Fortune was the magazine, Uh it was. It was a
piece about Walmart. But but but we spent you know, four days down there. The last day we're really really on campus and everything. But I mean, you know, both both you know, McMillan and Walmart and the Walton family who control you know, forty percent of you know the company. You know, they're trying to both turn the company and Bentonville into a place that will attract you know that you know, top town people, you know who from Silicon Valley who might not have come to Walmart and Bettonville
other otherwise. So it's all part of a big push to do that and to retain people you know, you know as they as they become this company that's for the top ranks. It's not a bunch of lifers anymore. It's people from PayPal, people from Amazon, you know, people from Instacart and a lot of stuff. So that's really what that's all about.
And I guess the makeover of Walmart into a really extraordinarily competitive digital player in digital retail and digital e commerce, competing very well against Amazon. That's not cheap and it impacts their margins. I guess they've got a board that is supportive of this.
This fellow, well, that was a really interesting thing because we were down there. I guess this was on January seventeenth, and there was a press conference where you know McMillan and also the you know, the governor of Arkansas, Sarah Huckabee Sanders and others gave a whole presentation all you know, but the company in the new campus. But meanwhile, Millan had given a speech earlier in the day. It was
just an employee only event. Well we I should actually say Jay one jay one did this, but but she was able to get you know, you know, recording, you know, the earlier speech, and in that uh, you know, you know, McMillan, who's very very almost zen like and sort of sort of you know, you know, unflappable, gave a more sort of spirited speech and you know, and he's basically saying, like, you know, we made this transformation, but there's you know, was there's so much more we have to do and
it's really expensive. And he pointed to this chart behind him showing how they're you know, operating margins just just dropping and they're starting to go up, go up a little bit. But but it really was that was pretty incredible, he said, you know, he said, I want to thank the board for not firing me, because but it was it was real. It was really revealing and a great thing to have. And you know, kudus to my co.
Writer thanks to Devin Leonard, Bloomberg BusinessWeek Senior Global Business Writer.
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, ten am to noon Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal