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Little m and a activity here in the tech sector, Intel finalizes a deal to sell fifty one percent of It's All terrorI stake to silver Lake. Now silver Lake folks, I got to know them back in the day. I think one of the smarter private equity folks that has a technology bent.
Some super super smart folks.
They've backed a lot of companies over the last thirty years in Silicon Valley. They know what they're doing and when they move their money, you pay attention. Man Deep Sing, I also pay attention to him. He's a senior tech analyst. The Bloomberg Intelligence Joints is here in our Bloomberg Interactive Broker studio. What's in Intel up to these days?
In Deep Well, they got our news CEO, and I think he's making the moves. Everyone was looking forward to what is he going to do differently than Pat Gelsinger, And it looks like he wants to turn around the foundry business. There was one school of thought that thought Intel should sell the foundry and focus on chip design like Nvidia. But clearly he feels, you know, foundry business can be turned around. And so the easy pickings here is raise cash, you know, get rid of the non core assets.
Which is all Terra here.
So they're selling fifty one percent stake, mobilize another business that comes to mind that they could sell. And look, with a company like Intel, everyone knows that, you know, you can't really turn around this company to show high growth. It's more about how do you manage the company in a way where they're not burning a lot of cash as well as they can have you know, low to mid single digit growth. And I think that's to be the playbook here.
So, man, deep, is silver Lake getting a good deal then with this epic?
I mean Intel paid you know, sixteen billion plus ten years back, so they held the company for ten years and now they're selling it half the price. And look, this isn't a high growth asset, which is why it was noncore to Intel. But we know Semis isn't that sweet part of the cycle where everyone seems to be bullish on AI and Semis, and so maybe silver Lake can come up with a better way to you know, leverage all Terra in that semi space, because that's what
everyone seems to be excited by. How can I play in the demand for Semis?
Why did they solve a whole thing?
Well, I mean it's a private equity player, so you know, they're not going to put a lot of money in one asset, and they just wanted fifty one percent so that they can run the company. At the same time, Intel can benefit if they are able to successfully turn it around. And yeah, I think Alterra still needs Intel technology to be successful. So it's not as if there's a complete decoupling. It just allows Intel to focus more on the core business, the foundry and their CPU business,
as opposed to focusing on Alterra and mobile IE. I think down the line.
Should we expect with this new Intel CEO to see more news like this Intel selling other parts of its business.
I think so mobile ie is definitely another one which is non core to Intel, even if they want to double down on AI and chip design. Within AI, I mean mobile IE is more autonomous driving and that also came from another acquisition that Intel did back in the day. So I hope they don't end up taking a loss on that one. But I do think the playbook here seems to be that they want to focus on foundry and core CPU chip design.
Foundry that's making chips, right.
Yeah, the manufacturing side, Now, who else does that? Well, we just heard the news around in Vidia, you know, using TSMC to make their AI supercomputers here in the US. So that's that was quite a bit of news because I would have thought TSMC would partner with Intel, and there was some rumblings about, you know, TSMC doing something with Intel at least here in the US. But it looks like Nvidia is thinking about making their next CI
supercomputer with TSMC. No talk about Intel, and that will be here in the US.
So then invested.
I thought there's some deal that there were Intel's gonna do a bunch of that stuff.
Yeah, so that's where there was talk about Intel and TSMC partnering. So that was the foundry side of Intel. But I don't think that's happening now.
So the Biden plan with Intel, which was to do a big, big deal, big investment, is that's still on or no.
So the chips Act money was given to Intel. It was also given to TSMC for or the Phoenix fab there they will be making this AI supercomputer with you know, Nvidia. But look, I think in the case of Intel, the challenge has always been why have they not participated in this AI wave? And the Chipsack money didn't help over there, all right.
Man Deep Singh, thank you so much. We appreciate it. Man Deep Singh. He's a senior tech analyst. He kind of runs our global technology research franchise over Bloomberg Intelligence, and he.
And Ana Agrana are the thought leaders there and they kind of.
Drive the process forward. Here Intel selling fifty one percent of one of their businesses to Silver like but a steep valuation discount that had the hurt.
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.
And Mike Grafey was sitting in for Steal here today. I'm Paul Swen.
You were live on our Bloomberg Interactive Broker Studio or streaming live on YouTube as well, so you can check us out on YouTube. Golden Sachs put out, there are results this morning, better than expected results that stocks up
about two and a half percent. Was really the equity trading desk powering the way here, similar to what we saw from JP Morgan, Morgan Stanley last week's Let's get the breakdown here with Alison Williams, senior analyst covering all the financial institutions for a Bloomberg intelligency joins us life here in our Bloomberg Interactive Broker Studio Goldman Sachs.
The stock traders had a nice quarter.
They did have a nice quarter, and you.
Know they didn't They weren't up forty five to fifty percent like JP Morgan and Morgan Stanley, but still enough to hold that number one lead across and what we're hearing is derivatives, which is not surprising, right given all
the volatility. And the other interesting note is, you know, Goldman this quarter a little bit weaker than the peers, but over the long term, I mean the market share games they've had in fic N equities trade really strong, leading across all of the banks over the ten years. Those three names, JP Morgan Morgan standing Goldman all gaining, But really Goldman has done a good job. They've been focusing on clients. They've also been focusing on financing revenue.
Fick trading also above a year ago, just not as strong and a little bit shy. And then the other part of the story, as you know, is those weaker fees. So Goldman is number one and equity trading revenue, they're number one in M and A, equity trading really powering these banks higher. M and A really feeling the fallout from uncertainty.
That's right.
So the company's investment banking revenue was eight percent lower than last year. Is that just due to macro uncertainty, companies not wanting to get deals done because they're not sure what's going to happen in the future.
It's exactly that. So debt fees.
Really have been the area of strength across these banks continued to be the area of strength this quarter. Equity fees, which started out the year strong. As you can imagine, there was some stalling as markets sold off, like especially in the US late in the first quarter, but now really a lot of those deals coming to a standstill. On the equity side of things, and then M and A, which really can be deriven by.
CEO sentiment.
Keep in mind, and you know, if you're going to sell your business, you want to be sure that you're getting the best value for your shareholders. Similarly, if you're buying a business, you want to be estimating what your return on investment is going to be, and you really can't.
There's so much uncertainty.
There's so much I think, so much of a wait and see approach that that business has really come to a standstill.
I see that David Solomon, the CEO, called out growing backlog. Backlog ain't cash, Backlog's not fees. What's the saying about the environment that gets stuff done, whether it's an M and A trade and IPO, that kind of stuff.
And that's a great point because we always do look at the pipeline and as you said, Samon did point out, look, we've seen it grow another quarter in a row. But you want that pipeline growing because there's more new business not coming in, not because things are not getting done right.
So the pipeline can.
Increase for two reasons, and you really want to What you really want is execution and confidence in the execution. So the positive sign, which I think is true for so many things, right, is that we have a huge level of uncertainty. If that resolves, then you could be back in business, and unlike some of the other periods that we've seen with incredible uncertainty.
Right.
So the pandemic, I mean, there was really no control over what happened there. I mean, obviously the scientists were working very quickly to come up with a vaccine. The global financial crisis, we know that there were huge underlying issues with the financial system.
In this case, it's really about the politics.
So certainly that is something that is incredibly difficult to handicap. I certainly am glad that I'm not the analysts they're trying to figure out or estimate what's going on, or a CEO thinking about whether or not now is the time to sell my business. But I think that that gives a little context in terms of if we can get certainty, can we really just.
Get that that that pipeline executed.
What's the high level takeaway from bank earnings now that we've already seen Goldman Morgan, Stanley, Wells Fargo and JP Morgan two was on Friday, right, Yep, so we've seen all the big banks basically report and they beat. What are investors supposed to take away from all of this about what it's telling us about the health of the banking sector at large.
I think, you know, so earnings, as we know, are backward lookings, and things looked very healthy in the first quarter. I think that you know, as I said, there's put some in takes, but for the most part, what we are hearing from the management is similar to what you'd expect with uncertainty. We do get Bank of America and City Group tomorrow that will give us, i think, even a richer look at terms of the US consumer, which you know, Bank of America is a good bell weather
for a City Group has this big card business. But the key trends we're seeing are one, you know, trade trading strong, fees weaker, that's really.
Due to the volatility UH.
Two, buybacks strength, and buybacks coming in better than expected.
Big program at Goldman.
So really this benefit from lesser regulation UH does have an does have an impact that we're seeing. And then third, you know, uncertainty manifesting in credit provisions. We saw a big provision at JP Morgan or I should say a sizeable provision there less so Wells Fargo, but both pretty conservative so in terms of what they're estimating going forward, and again not based on what we've seen, but uncertainty. We expect the same at Bank of America and City tomorrow.
What's a head count story on Wall Street these days? I mean, if this kind of outlook, in this uncertainty, I think we'll start cutting back head county thing.
I think that's uh exactly goes to your point earlier, Paul about pipelines, right, so we have the pipelines. If we get uncertainty, we can get that.
Relieve.
The CEOs are talking positive, but actions do speak louder than words.
We did see cuts at Morgan Stanley.
Certainly they they cited their typical review being pulled forward. They cited technology, but certainly the timing I think is instructive. And JP Moore, I mean, sorry Gold and Zachs also talking about cuts that they'll be making into two Q flagging some severance charges there. So I think that signals that when they're thinking about the revenue sort of in the months ahead, that they do think that this uncertainty is going to damp the potential for the coming quarters.
What about CEO pay Is it going.
To damp problem there?
No problem there.
Yeah.
So we we just got through that season and you know that that's going to be how they navigate this year ahead.
I mean, they're all in that thirty four thirty five million dollars range, all in, so good for them.
They get Hey, we appreciate that. All right, Allison Williams, thank you so much.
We appreciate that.
Allison Williams, senior Global Banks asset Managers, all that kind of stuff for Bloomberg Intelligence. It's a busy day and we appreciate her coming into New York City.
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.
Mikey Shaw joins us here.
He's the senior Farmer, farmer and biotech analysts for Bloomberg Intelligence. He's in London and he covers all these big farmer companies and big one today Mikey Pfizer abandoning it's obesity pill. That sounds like a big deal because I keep reading the research you and your colleagues over there putting out about this obesity market.
This is a big market.
And for Pfizer to have this big miss year, how big of an issue is it for Pfizer.
Yeah, I mean I think it's it's a sentiment issue. I mean, clearly, you know, you've got a massive BC market out there, you know, one hundred billion dollar plus in terms of sides, and it's a market where you know, Phizes already kind of trailing large farm appears like Lily rosch Novo in terms of you know, the BC pill itself. So this was Danny Glippron. So what what it they actually did was it used to be a twice daily pill.
They kind of can that and repurposed it into a once daily following the failure of another one of their OBCs pills, Glippron. So I'd say, you know, confidence into this readout, you know, was pretty low. We had ready kind of removed it from our models, you know, back in twenty three. But what it does, you know, create is you know to two concerns. One is you know, the trailing timeline in the BCC space, and two it kind of adds to the mid to long term growth
worries of the company. So they've got you know, about fifteen billion dollars in and lost revenue to looees that they'll need to kind of offset over twenty five to twenty nine. And at the moment, you know, it's quite hard to see you know where that where that offset and where that additional growth is going to come come from. Long term obesity would be kind of one pillar. But you know, following the Danaglipron read out today or the
news today, you know, that's obviously mean terminated. So you know, we think that they're going to have to go to you know, look to external assets in the OBC space if they're going to remain a relevant player in the in that market.
Is anyone else doing obesity pills in this market right now?
Yeah, So, I mean there's a few biotechs out there that are that are doing pills. In terms of the large farmer competitors, you know, Lily's got one, we'll see the data for that this year phase three that couldotentially launching in twenty six. Novo's got one they're expected to file and then you know, Rush also has one kind of in early to mid stage development too. On the
biotech front. You know, we're seeing moves for you know, Viking structure turns, you know, all positive share price moves today and they all hold or all JP ones in their pipeline.
Two.
Hey, Mikey, can.
You put into just perspective the size of this obesity market relative to other big verticals that drive these farmer companies.
I mean, I think the excitement around RABESTI is you know one, it's you know, prevalence is rising. You got forty percent of US adults at the moment they are obese, and it's a relatively underpenetrated market. So I mean, you know, penetration rates are you know, low single digits, you know in the US at the moment, you know, probably even lower elsewhere, you know, globally, And you know, we think that this market could grow, you know, well in excess
of one hundred billion dollars. So yeah, I mean it's a massive opportunity. I think in terms of you know, drug classes, I think PD you know, immuno oncology PD are one PD one drugs you know, with the kind of biggest class to date in terms of sales. So that's like your contruder Bristol ORPDVO, but you know GLP ones could potentially surpass that.
So Michael, where does Fizer go from here after this setback? Do they I mean, do they double down on OBESIT pills? Do they do they try something new? What's the plan here for Pfizer?
So, I mean they've got another oral jolp one in their pipeline, So it's in phase one. It's being developed for diabetes. Notatural you know whether or not they can also look at that in obesity two. But clearly the timeline here is the issue. You know, you've got oral jill wants coming to market in twenty six onwards. You'll probably have a wave of new treatments coming in, you know,
towards the end of the end of the decade. So you know, we really think that Fiser is going to have to go out, you know, either in license at jilp one or do some sort of M and A. They're well positioned to do that. You know, they've got ten to fifteen billion of M and A firepower, you know to four acquisitions. So that's really you know, how we think that they're going to do, you know, play catch up in this space in terms of you know, I mentioned some biotechs out there that have you know,
quite appealing assets. You know, you've also got China too, so you know we've seen some you know, very competitive data in Chinese patients for some of those domestic players. And you know we've seen the lights of Novo Astra Mark kind of all kind of you know, delve into China's R and D locker to essentially bolster their OBCI pipelines.
All right, hey, Mike, you know we much prefer to talk to you than Sam Fazzelli. This is a nice refreshman. So we hired Mikey Shaw like a million years ago.
He was a kid. Now he's a grizzled veteran.
I see little gray hair there, and he's one of the leading pharmaceutical analysts all across Europe and we appreciate getting a few minutes of his time. Mikey Shaw senior Pharma and biotech analysts for Bloomberg Intelligence as part of that just that great global healthcare team that we have at Bloomberg Intelligence, led by Sam Fazzelli.
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