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Stay in in the TMT space if you will. We're going to talk about check in with anorog Ronnie. He's a Bloomberg senior tech analyst for Bloomberg Intelligence ANRAG. You know, Microsoft as well as anybody put into context for us, this cybersecurity attack has been certainly at the top of the news here this morning, and it just kind of, I think, at least to me, is surprising that a company with the resources and the technology expertise of Microsoft that they could in fact still be subject to this
type of risk. How should we think about it?
Yeah, Paul, when it comes to almost all the major tech companies, this is probably the most important and biggest risk for them. And again, you know, whether it's Microsoft or Amazon or Google, you know, this is one of the biggest worries for all of us. Is you know, you wake up one morning and you see a big outage out there, I mean almost a year ago. We remember that CrowdStrike problem and what it did to you know,
airports and all the other things. Now, but in this particular case, I think it's a lot less problematic than what we saw a year ago. This is primarily based on certain on premise software. I mean, there is an on premise version of scarepoint software that they have. This is the it's only affecting those particular workloads, so it's not as widespread as some of the other areas we have seen.
Now, what does this mean for cybersecurity companies?
I mean it's a good thing for them. They are I mean to be honest, over the last fifteen years that I can remember, they're probably the one area it doesn't matter what the macro environment is, they continue to grow, you know, bigger and bigger. That's because there's so many little nuances that I have to be protected. These networks have multiple software from multiple vendors, and a lot of these companies do some unique things go prevent them endpoints security,
you know, analytics, you'd name it. I mean, there is no shortage off I would say funding for a lot of those companies.
So how do you characters or how do investors characterize just cyber crime risk for some of the big tech names that you know, the MAGS seven names are just a big tech names in general. It's something that we don't really talk about too often, do.
We No, In fact that as I said, I mean, I've always said that this is probably the biggest risk that faces all of us because remember, now think about it, like AWS takes care of a lot of startups site. Now you see a problem with that network, the rest that then go down. Same thing you could say with
Google Cloud platform, Microsoft's cloud platform. This particular incidence is only for the on premise applications, so you know, in a roundabout way, maybe this helps Microsoft in the long run that those customers say, you know what, I need to move online. I need to move more worklows to the cloud. But in totality, I mean you look at it from a cyber insurance point of view, insurance companies
don't even want to go down that route. I mean, this is a I mean one of the biggest hidden risks for all of us, especially as most of our savings are you know, digital and you know placed in not in you know, safe boxes, but in investments somewhere.
Digitally and honor again the text banks. We also had some IPO news. You had fig Mal looking to raise about a billion dollars us ipo.
What is Figma?
What do they do?
What's their market value?
Yeah? I was, you know, this is probably one of the more interesting companies that I have come across in a long while. A few years ago, Adobe made around for them, you know, paid twenty billion dollars to buy them, that didn't deal didn't go through. They you know, Adobe ended up paying pigma billion dollars as sort of breakup fee. But now they're going public, so very unique software in their market. What they do nobody else does it so well.
They help you design application all the way from ideation to you know, publish applications or you could say, issuing applications out there for people. So, you know, we own a white boat. You want to discuss this idea with a team. Phenomenal software. It has very high market share and at this point, to be honest, I do we had one product that had some overlap with them, but frankly speaking, there isn't a large company out there that's a credible competitor for them. So we think this is
going to be an area where see strong interest. We anticipate sales growth north of forty percent both for this year and next year. We think revenue could be one point six billion by the end of next year. And you know, our analysis indicates post evaluation somewhere between you know, nineteen and twenty three billion dollars or twenty one billion at the midpoint.
And propose stock symbol for this pending IPOs FIG Bankers and Morgan Stanley Goldman Sachs all in a company and JP Morgan, so the blue chippers there for that deal and anag in your software space. We've had a couple of pretty good deals this year. Circle Internet Group wore we've I mean, do you expect more?
I think that. I mean, if you have the capacity to go out in this market and raise capital, this is really good valuations. I'm very nice right now. I mean, I would strongly encourage if there is somebody who's looking at it. But at the same time, you know there is an issue about do you want to go and see your work being scrutinized. Public funding is also very good. There is so much private capital out there, so it
really depends on what somebody is doing. Last year, we saw an IPO came out Service Tit and just in the first two months or first two quarters of there coming out as an IPO, they actually thought demand go because people recognize what this company has. I think the same could happen to Figma when you know a lot of people don't know what these guys do, and you know that recognizes the value of the software or the company just by going public.
All right, very good. Anna Agarana, Senior Technology Channels, Bloomberg Intelligence. He's in a Chicago. You were talking about a little bit about MICROSOFTIC at the cyber security issue that it is dealing with. Plus we got some IPOs in the software space picking back up. It's always a good sign here.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarcklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
All right, we're earlier this morning of Verizon CEO Hans Vestsberg. He talked to us, talked to Bloomberg Shinali boss Sake about some of the things that the company is doing right now. They just had their earnings report, but now we want to get the analyst view on that. So for that we'll bring in John Butler. He's Bloomberg Intelligence senior telecom analyst on these Verizon earnings. So John, good beat second quarter revenue, raise the profit outlook, what's making the company so optimistic?
So I would characterize when I look at Verizon, I think of the phrase game of the inches, right. I think the improvements here quartering and quarter rout are incrementally better. They're edging towards that acquisition of Frontier, which is really
going to change the game for them. But in the meantime, they put a lot of changes in place in terms of their go to market strategy, how they're combating promotions coming from T Mobile and AT and T and on the margin quarter in and quarter out, I just see them doing a better and better job. I think all the actions they've taken are starting to work. And so taking the long view here, I really think Verizon is
improving just quarter and in quarter out. And this was another quarter where you could look at it in isolation and say, you know, it was a solid quarter, a little bit mixed on some of the metrics, But I think I'm balanced better than last quarter in last year.
John, what's kind of the positioning of Verizon in the marketplace? Like, I've been a long time Verizon wireless customers since the beginning of service, actually, and I guess I was initially drawn to it because I thought they had the best network. So quality, is that still the case because it seems like T Mobile's gotten a lot better in quality and AT and T. I don't know.
Yeah, you know, Paul, you bring up a good point. I think there's a question mark out there as to whether Verizon still has the best network versus T Mobile and AT and T. But I think they have a slight edge they are in terms of coverage. And it's interesting a lot of people ask me about wireless, who was the best network? Who should I choose? And the one thing that people are always asking about is how's their coverage? I think coverage is very important to people,
and I think when you think on that metric. In terms of that metric, for Rizon delivers the bars on your smartphone probably more than T Mobile and AT and T in terms of download speeds, though I suspect that T Mobile probably is gaining the edge here now.
What about prices. Did did did Verizon increase their prices? If so, did that help?
So?
We did see in all the carriers are increasing prices right now as the market matures and new user growth is slowing considerably. The only way you're going to grow that important service revenue metric is by raising prices. They tend to do it on older plans. For Verizon, stunt it over the past six months. As if you look over the past year so as AT and T and T Mobile, that's flowing through and it's helping to boost
the service revenue. I think over time they're adding in those little extras like you know, device insurance and perks like you know, added content that you can purchase at a discount through through Verizon, and I think all that together is going to continue to provide a lift to
service revenue. It's nothing special. Again, I'm looking forward to that Frontier acquisition where they're going to buy you access to two million fiber broadband subscribers and eight million fiber homes passed, because once they get a Frontier under the hood, they're going to be able to bundle that wireless service with fiber and I think that's going to help to really drive renewed subscriber growth.
So, John, use of cash heer, how do they kind of allocate it between debt reduction. They've got a lot of debt on their balance sheet versus funding that big juicy six percent plus dividen yield, so.
They're doing both. Paul, I think free cash flow is going to get a lift from HR one, the new tax legislation. It's also a very cash flow rich business. As we exit the year. This year, they'll have most of their celves sites upgraded with the new C band midband spectrum, which again is improving network speeds and enhancing
their coverage. So that whole project is going to begin to wind down a bit as we get to your end, so they'll be able to sort of maintain spending without having to increase, which is constructive to free cash flow growth.
All right, John, thanks so much. We appreciate it as always. John Butler, Senior telecom analyst for Bloomberg Intelligence.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts. Or watch us live on YouTube. Let's go back to the car business and we talk about a name. We don't talk I don't think enough about or as much as maybe we could. And that is Stillantis.
I think about the old Chrysler with Fiat and all that kind of stuff. I'm not sure what all the brands are there, but they at two point seven billion dollar charge. Here Steve Manner, Global Autos and Industrials Research Channels for Bloomberg Intelligence. He joins us. Here, Steve, what's going on with our friends at Stalantis.
Yeah, so they reported the preliminary first half numbers today. They booked a loss and a charge of three point three billion. A lot of that is, you know, canceling the fuel cell R and D business. They're canceling like an EV from Maserati, taking some other charges on recalls in tariffs. So overall, at the end of the day, I think the if you listen to the call, there's really no new bad news, which is good news for the company. I don't think it can get any any worse.
So then that's why the stock's actually reacting positively at the moment.
Steve, what about the president's efforts to dial back the sport for evs is that affecting them as well.
You know, they are revisiting the EV business, not dialing back, not so much in Europe, but revisiting it definitely in North America. And one thing that it's it's really bad for the quarter for them was really their North American business. Their North American business drives most of the profit. Shipments were down twenty five percent in the first half year
on year, and a lot of that is controllable. One of the things, a couple of things that they are doing to kind of arrest that decline is not only cutting back on production, but they're relaunching a couple of popular models that they've they discontinue. One of them is the jeep Jaer Cherokee. It's going to come back later
this year. And more importantly to stop market share loss on their RAM trucks is they're going to reintroduce the V eight, so you know, they can't you know, they delayed, they didn't really stay canceled, but the delay the EV product for the Ram trucks. But now in reintroducing, uh, the V eight, which is you know, the biggest engines you can get for a gasoline engine you can get on a on a truck.
So where is stalanthis in the world of big auto how do you how do they position themselves? I think the four GM, Volkswagen, the Chinese players. I'm just not sure where to put Stalantis these days.
Yeah, I think, I mean, they do have an important role to play in the auto market. They're really strong in Europe's particularly in there what they call the B and C segment, which is the hatchback the compacts up compact segment.
Uh.
They also have really high market share in their commercial vehicle business. This is like their Ram transit man that you see. You know, a lot of contractors use. You know, they have thirty percent market share in Europe. But and then again Ram truck is one of the most popular pickup trucks in the US market. Unfortunately, you know, for and GM has taken share from them because they didn't have the V eight when they talked about EV's and in more few efficient trucks. But you know, the US
market is quite different. Commercial users do love the power the torque, so they're reintesting reintroducing the V eight just to try to bring a game more market share back.
And they have a new CEO and Tonio Foaloza. He's in office for roughly a month, so he's just getting there. What are some of the top items on his agenda? Has he talked about it?
No, but we'll hear more about it on July twenty ninth. So today's call was just a proliminary, proliminary, preliminary call on first half. We're going to hear from the new CEO on the twenty ninth, And I think a lot of the questions still in the air is, you know, what is the strategic direction for the company in terms of evs, How are they going to manage the tariffs, which is still a big unknown because because you know,
negotiation is still ongoing with Europe. And then you know, what is what are they going to do do with some of the kind of slower performing brands like Maserati, which is really draining a lot of their cash.
All right, Steve, thanks so much. Appreciate that Global autos Research channels for Bloomberg Intelligence.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
All right, at least Mitello Paul Sweeney live here on our Bloomberg Interactive Broker Studio streaming live on YouTube as well. I consider myself a pizza aficionado, So by definition, I'm not really a Domino's person because I live in a world where there's great local yes, but for a lot of the world that's not the case. And so they depend on the Dominoes of the world. And they came out and you saw that in the number study, some pretty good numbers. Let's break it down with Michael Halem,
Senior Restaurant and Foods are analyst for Bloomberg Intelligence. So some pretty good news out of Domino's, Mike, what'd you take away?
Yeah, listen, they've they have some nice tailwinds this year.
Stuff.
Gross Pizza has done really well. It's it's really driven some strong same star sales here in the first half. You know, the industries about flat in the US, and you know, they drove are almost three and a half percent comp here in the second quarter, so outperforming the market by a pretty significant margin. And they also rolled out door dash to all their stores in this second quarter.
And so they're going to start ramping up the marketing there and that should give a nice, nice boost the shares over the next twelve months or so and maybe beyond. And so yeah, for those two reasons, you know, we expect them to continue to outpace their QSR Pizza and QSR Burger competitors throughout the year end.
What about their loyalty programs, they know, a lot of analysts were saying, you know what, this is going to be a big, big boost for them. Did it help out we're doing.
Yeah, that's been they that was the other thing they cited. And so, you know, they they rely heavily on households making you know, fifty sixty thousand dollars a year and below.
And so you know, as everyone knows, that's been a very weak segment of the restaurant industry for the last few years due to all the inflation, right, and so to bring people back in, they started lowering the redemption the number of points needed to make redemptions on the loyalty program, and it's been successfully bringing in more carry out consumers, which are typically lower income, right, And so by bringing those consumers in, you know, it's definitely given
a boost to their traffic over the last three quarters or so.
So, what's Dominoes and some of the other restaurant chains that you cover, Mike, what are they saying about tariffs and how that might impact their costs and how much of their costs will they take in margin versus pest along to consumers? Is their consensus building?
It depends on the chain. But you know, luckily, restaurants source a large majority of their product in the in the country in which they're operating, right, So Dominoes operates in over eighty markets, and and all of their products, you know, all of their countries largely source everything domestically, right, And so restaurants are in a good space, you know, the restaurants companies, the stocks got hammered back in April.
You know, I think that was largely a case of the baby being thrown out with the bathwater, because restaurants have very low exposure to tariffs, and I think we've seen that in the rebound since April. You know, some of the restaurant names we cover, you know, two ones that we like, Shakeshack and Crackerball. They've rallied one hundred
percent over the last couple months. And I think they're in a good place because you know, if people do recognize some price increases at retail, at the mall, stuff like that, at whatever it is, fifteen to twenty percent, they're not going to see those same increases in restaurants and may you know, look at as a better value.
So people are still dining out as much as they used to because I know, I consider myself thrifty. So I cook the entire week and then we pick one night where we go out to eat. It's a Friday, you know, because Mama don't cook on Fridays. So are more do you see that kind of a change in the habits of the people who are going to eat out?
Well, we've seen that, there's no doubt, especially due to all the inflation. We've seen traffic decline now for several years in a row. But restaurants have been able to, you know, the ones that are doing well have been able to more than offset that with price increases. Right and obviously the best performers of the bunch are absolutely able to drive traffic. And it's that's really about providing
a very good experience. Right now, people are very discerning about where they're going to spend their restaurant dollars when they go out. They want to make sure they're not going to have a bad experience, and so they're continuing to go to places. You know, think Texas Roadhouse is
one that really stands out. They're going to a place where they know they can get good value on the plate for what they pay, a very consistent experience, right, And because of that, you're seeing a wider divergence between the winners and losers in the restaurant space.
Mike, how about labor? President Trump has effectively shut the southern border. Have your companies who typically who rely to some degree on that labor force, are they seeing it yet?
Yeah, you know, everybody's logged onto e verify and most of our chains, you know, are making sure that their employees are have papers and are operating legally. It's more of an impact to I would say, the independent restaurants in the country. But then you know what happens is that ends up being a price competition, and so it drives up prices for labor. And we're seeing another year of about four to five percent wag ery inflation in the restaurant industry this year.
And are we changing how people are changing how they eat. Right, So, in the last thirty seconds or so, GLP ones. Our restaurant's cutting back on those portions, making things smaller, you know, less on your plate.
Well they are, but mainly because of inflation.
Well there you go.
You know, GLP ones, you know over time, you know, we expect that to be the biggest way to combat that is to decrease the portion sizes and to make sure you have some healthy options on the menu.
Michael Helen, Thanks, We always appreciate chatting with you. Getting the lay of the land in the restaurant business. Again Domino's, but got some good numbers here today, so good for them. Michael Helen a senior restaurant in food service analyst or Bloomberg Intelligence. He's based down there in our Princeton office.
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