P&L: Josh Green Goes Inside The Trump Bunker

Green are Washington correspondent for Bloomberg News. He also also the co author of this week's cover story of Bloomberg Business Week, which is as much about the future of political campaigns as it is about marketing. Josh Green, thank you very much for being with us. All right, So, in fact, there was a quote in this story where I believe someone who interviewed said, oh, yeah, you know,

political campaigns, they just like marketing campaigns. Yeah. My my source, high level Trump official, liking at the selling burgers in a burger shop, that you have to you have to appeal to a wide audience and convince them that you got the right product and doing that is the key to success. All Right, I kind of pushed you ahead a little bit. I want you to step back. Tell everybody what the story is about and why this is

such an interesting look inside a political campaign. Well, I've been covering the Trump campaign the whole cycle, and during that time and speaking to a few senior Trump officials and members of the family. Uh, they have said the contrary to the public perception that Trump's campaign is really just Trump and a Twitter feed, they actually have a pretty sophisticated voter targeting and turnout operation that they built

in San Antonio, Texas of all places. So I appealed to them to let me go down and check it out, and along with my colleague Sasha Eisenberg, we got exclusive access to Trump's digital operations for the cover story in this week's Business Week. So what did it look like in their in their sort of campaign operations that could easily parlay into a media It's like, on what what interstate is it? I forty? I think it's four ten.

But it looks honest, Yeah, any other campaign headquarters. You know, you've got Trump signs everywhere, You've got a lot of you know, young eager. Um, uh, kind of geeky looking people. Frankly, this is a digital operations. They also had a call center there where the folks were a little older and tend to be carrying guns. Who's the guy that looks like a martial mixed martial arts expert. This would be Brad par Scale, who is Trump's digital director and has

a wild backstory. Uh, never been involved in politics before, but did make the Trump Foundation's website, also made Trump wineries websites. Is a guy who's in the Trump orbit, and as Trump cycled through various campaign staffers, par Scale kept rising with each successive turnover to the point where he now runs the campaign's media budget and oversees the staff of about a volunteers, more people down in San

Antonio than there are in Trump Tower, New York. So, um, you said that they carry guns, Well that was you know, you don't usually see that at campaign headquarters. Remember this is in Texas and San Antonio, Texas to Republican candidate, open carry gun law, second Amendment, big big deal to voters down there. So yeah, they have a volunteer call

center where you call Trump State hundred number. The volunteers answering the phone, and sure enough the guy started talking about look down and he has a gun hanging off the ship. Evidently he brings into work every day just in case, you know, somebody I don't know bum rushes him or something and he feels the need to defend himself. But you wouldn't see that in a Hillary Clinton headquarters

for sure. Um And frankly, I don't know. If you go around uh San Antonio, you find a lot of people with guns just sort of hanging off them either despite the free carry laws. But so we're what's the what's the end goal of this operation? I mean, it's obviously to get Donald Trump elected president? But is there some sort of ambition lying underneath this that goes beyond

the election? Yeah? I think so. I mean Jared Kushner's son in law, is the one who really put together this organization after Trump won the nomination, you know, and up to that point he really wasn't much more than just Trump and a Twitter feed. But I think Kushner recognized that, look, if we're gonna run a presidential campaign,

we need a serious, small dollar fundraising operation. Reached down to a lot of Silicon Valley marketers and essentially looked at it like a like like you would any ordinary business problem, like we need to get customers in the door. So what they did was spend an awful lot of money, uh, some of which they raised selling the Trump hats. They also had a bunch of autopen machines down they're signing Trump hats like full time, all day, every day to

sell the people. But they've used this, this influx of money to essentially build a massive Facebook list of Trump supporters and donors, which and this is key because it was paid for with Trump campaign funds. Trump's campaign will own this after the election win or lose, and could conceivably pored it over to become the audience or say a Trump TV network or a Trump new media venture. So as usual, Trump kind of has his eye, I think on the bottom line, regardless of what the outcome is.

Un November eight, Josh, could he also end up selling or at least renting some of that information to the Republican National Committee? Is his operation more sophisticated than the GOP? Well, yes and no. His list is bigger than the GOP's because it includes not only the r n c's information, which they handed over to Trump when he became the nominee. But also information that Trump's own campaign has managed to

go out and harvest from commercial databases from supporters. So he has a very big and very valuable list that strategists would value anywhere between probably fifty and a hundred million dollars. Now, what what presidential means typically do if they lose is they can license that to other candidates, other entities. You know, Mitt Romney has a list that you know he'll rent out to other Republicans to raise money.

So Trump could could do that. But but a wink Trump, that could also be broader commercial applications, and so he could really do any number of things with it. Thanks very much, Josh Green. He is our national correspondent Bloomberg Business Week cover story getting inside Bunker Trump. This is Bloomberg Trunk. We just can't stop saying that name. Today, Ganette dropped its six eighty three million dollar bid for

rival Trunk. Here with us to break down what this means for both companies going forward, why it failed, and everything else related to Trunk is Alex Srman of Bloomberg News. Alex, thank you so much for being with us. How long does this segment when we only four minutes? Can we just go back and forth saying Trunk, I'll say Trunk and then you can please you're speaking my language. Um. Yeah, Look, this is something that I've been following for months now.

This is this is going to be in a Harvard case study on how to do M and A. Um. Ghannette came after Trunk a few months ago, offering twelve dollars and cents a share for Trunk after just three months or so after Trunk sold shares to h it's new chairman, Michael Farrow at eight dollars and seventy five

cents a share. So it seemed like if Trunk felt like the value of its company was eight dollars and seventy five cents or roughly in that ballpark in February, then it should be certainly worth twelve just three months or so later. And yet Michael Farrow said, no, we

feel like it drastically undervalues the company. So ghanett up, that's been to fifteen dollars a share, and still Trunk said no, this is not good enough, simultaneously selling more shares to a billionaire Patrick Sun Chiang four fifteen dollars a share. But the thinking they're being that Patrick Sun Chiang was going to participate in the growth strategy, which I want to talk about in a minute of trunk,

so it's not worth it to just sell out. So Gannette went back to the drawing board and offered eighteen dollars and seventy five cents a share, an enormous premium a company that earlier this year was trading under eight dollars a share. But of course it's in the hyper growth industry of newspapers. So finally, yes, finally the two sides reached a deal. Uh, And yet the financing was

not there at eighteen dollars. In other words, banks felt uncomfortable lending at that price because of the deteriorating businesses, and potentially because of the banks that Gannette used in this case, which were p NC, SunTrust, Jefferies. These are not sort of your bulge bracket banks, and many of the sources I'm speaking to today have told me they think that if Gannette had used different banks, maybe this would have worked out differently. But in essence, this morning

we learned that Gannette throwing in the towel. So these two companies will operate as standalone entities, and the shares of Trunk down more than fifteen and a half percent currently, which basically they're trading about ten dollars ten dollars a share. Trunk. The name was supposed to, as you described earlier, to do with Tribune online content, but it also is a term if you happen to be in the British Isles.

It describes the tip jar in a restaurant. In fact, there's the name of a person is called the trunk master, and that's the person that you know gets the tips and sort of pays out everybody in the establishment in details now, But the reason I go there is because this is not me saying. This is Mr Farrow who described it this way when they changed the name of the company. Are there pieces of trunk that really are worth a decent amount of money. Yeah, there's a reason

why Kennette wanted to go after this. And they have a couple of prize assets. They own the l A Times, that's probably the biggest prize and they own the Chicago Tribune, which is another prize asset. Gnnett owns USA today, but after that they don't own any large regional newspapers. So the feeling would be that there are a lot of potential synergies the big newspapers could sort of funnel into USA today in l A. Is there an l A magnet?

Is there a person in Los Angeles? Patrick? Right? I mean, why not just have because Jeff Bezos correction, why not him just and in fact, from my understanding that that actually that structure was in fact contemplated here, but they had already gone so far down the road with sort of the transaction as is, meaning Genet buying Trunk that in the days that in the recent days where this deal was coming apart, it just seemed like it was sort of a nonstarter from Trunk. So maybe this continues.

Maybe maybe he comes in now and he says, okay, if Trunk can't push its stock price back up to at least fifteen dollars a share. Look, Patrick soun Sunk himself is underwater significantly now because he bought in that fifteen a share and the stock is currently under ten dollars a share. Trunk reports earnings later today, and certainly they're going to speak to what their go forward strategy is. But I want to talk about what that might be.

There is a video online for people that have not seen this where Trunk describes why they changed their name to Trunk. And I want to read you two sentences from this video so you have an idea of what you will hear. This is from their chief digital officer and him, as you pointed out, the whole strategy for Trunk is to go online. Here's the quote. One of the key ways we're going to harness the power of

our journalism is to have an optimization group. This Trunk team will work with all of the local markets to harness the power of our local journalism, feed it into a funnel, and then optimize it so we reach the biggest global audience possible. So there it is. There's the strategy optimize. What does that doesn't mean anything? Pim It is a bunch of nonsense. So I have no idea what they're going to say today. If it's just gonna be buzzwords, maybe maybe turnalists will be put into it.

But this is also tell me about the distribution that exists, because as you said, there's got to be some value here for somebody that knows what they're do. Sure, Look, the whole idea of of newspapers going online, you can sell the so called native ads, and you can make a little bit more money by sort of building the ads right in to the content and having them. And of course video adds that you can put online make a lot more money than sort of your display advertising.

And you can go to a pay wall. And there's all sorts of things that have been tried and none of it really works. I mean, you know, the newspaper industry continues to decline. The transition from print to online has certainly not been a flying success for any newspaper companies. But that's I was gonna wonder, you know, is Trunk

more valuable? Uh? Is split into pieces? Right? I mean, if somebody buys the l A Times, the Chicago Tribune rather than buying the whole thing and optimizing and funneling and etcetera, maybe maybe we'll have to see, you know that the idea here is the answer to that is no, according to Michael Farrow, that this company really is going to do something different than the rest of the newspaper industry, and therefore it was worth it to refuse a takeout

offer at fifteen a share. But how much rope do they have here before shareholders revolt was going to the

big question. I was gonna say, just give you the numbers, right, because you always work off the off the sales, right, the numbers right, So we're talking one point six is a one point six billion dollar sales for the year, right, and you come out with net income of eighty million dollars, right, Net income of eighty million dollars on a one point six billion sale exactly, So that is not a strong business,

as is uh. And again, the the ideas that have been thrown around by the newspaper industry in general, this is not just speak to trunk, have not been so compelling that there has been a wave of you know, euphoria in this industry. And in fact, the reason we see consolidation in the newspaper industry is the same reason we see it in so many industries that in many ways these companies have run out of ideas. And so you can solid it, you can at least cut costs

and just look across the entire newspaper industry. When people talk about synergies, you know, everyone says, oh, that means layoffs in the newspaper industry. It's true, certainly, these companies really tighten up. They've been doing it for years, and we just see continued layoffs even at the big national newspapers. I want to thank you very much, Alex Sherman, as always are Bloomberg Deals reporter, giving us the lowdown on

Gannette walking away from an acquisition of Tromp pleasure. You know when we get to talk to the CEO of a company, Synaptics, this one particularly. It has a market cap at one point eight billion dollars based in San Jose, California, and you've probably interacted with many of their products because they are leaders in display driver technology. Rick Bergman is the chief executive and he joins us now from our San Francisco studio home to nine sixty Bloomberg nine six.

Thank you very much for being with us. Rick Bergman, thank you very much. It's great to be here. Okay, now tell me what's going on with with Synaptics, because you've got to dial back to June. You were in talks perhaps with a Chinese company about a takeover. The stock is up today substantially, but it's down about thirty three so far, uh this year. Maybe just tell us a little like six month history what's been going on

at Synaptics. Well, of course, we're a major supplied to all the smartphone manufacturers in a couple of them have had some stumbles over the past six months, and kind of as they go, we go. But based on our guidance in what we just announced last week, we're back in a healthy growth period again for the company. Does that mean that smartphone UH purchases are increasing faster than you've expected, or just that you've got more contracts than

you expected? What's that do too? Well? Where we're seeing our growth as an area where we've really innovated, which is around integration. So earlier you mentioned that we're in the display business, and we certainly are, but we're combining that actually with a touch controller, so when you touch your smartphone, that's that Synaptics behind that technology, and we're combining those two and are really leading the industry in

that particular area. Well, can you just expand a little bit more on what the strategy of the company has been because I recalled directly that um in that review that you gave. I believe in June UH you talked about that sizeable revenue shortfall during the March quarter and you said that that was going to carry into fiscal Q four. Well, we finished up our fiscal Q four and and and certainly did that come to fruition. That is that what happened because you talked about the week

PC business as well. Well, we did have a weaker Q four Now for us, that was June, the September quarter. We just announced it was sequentially growth versus at Q four, So and then we guided to another seventeen percent if you take our midpoint. So, so we feel we we have the growth engines back on track. For Synaptics. Earlier this year, there was a Chinese buyer group. Uh, you're

an active negotiations with to possibly take over Synaptics. The shares are down more than of Synaptics so far this year. Is that still on the table? Well, I can't confirm or deny market speculations, and that's kind of in our stance for about a year now. Uh. And so we are focused on growing the company, as I said, and we're actively out there. We've been pretty open about that about looking up targets ourselves for M and A to allow us to go forward with inorganic growth in the

human interface area. What would be the natural thing to acquire. I mean, what would be um a natural type of business that you would be interested in acquiring that bolster your existing platform. That's a great question. So as as we discussed, Synaptics is well known for our touch technology and also our our display technology, so you kind of get the touching and seeing part of the human interface experience. So as you can imagine, we're also interested in things

like audio or voice, or motion or three D gestures. Well, smells probably ways out there, but uh we we look at other technolog metal goal health technologies certainly also fall under that umbrella. Talking about gross margins and how they are performing at Synaptics well as as in an American company or semi conductor company, our margins are are lower

than what you see from other semi conductor companies. We made a strategic decision that we're going to co compete in the consumer markets like smartphones are PCs, and that's how we're going to get growth and actually grow our earnings for share. What what that's meant over the last quarters, our gross margins have come down, But as I mentioned conversely, is what's going up is our top line. You know, assuming that you're talking about how Synaptics really relies on

the smartphone industry. There's been a lot of talk about how the industry is is saturated, that it's not going to expand that much more. Anyone who wants a smartphone probably has one at this point. What's your take on this, Well, we have some great innovations coming and when people talk about slow growth, it's still mid single digit type of growth. And you're talking about a billion and a half smartphones

per year sold. So if you just do the math, it's a hundred million units of smartphones in addition each year that we can can participate and where and our plan is to grow our footprint within that smartphone market. We've added fingerprint sensors is another example where we've really grown our dollar contribution per phone. Rick bergband president and CEO of Synaptics, thank you so much for being with us.

You know, Lisa Abramo, it's uh. The price of oil is trading higher by more than eight percent right now on the New York NIMEX. This comes after a an explosion in the western Shelby County, Alabama, and this is a pipeline that was being worked on and apparently it supplies a great deal of gasoline to the southeast. In fact, this is a sort of major hub for for a major transit point. I beg your pardon for gasoline, and here to tell us about it is Laura Blewett, our

own first word Bloomberg first word oil reporter. Laura, thank you very much for being with us. Tell us about this, this pipeline, it's connection to higher gas prices in the southeast. Yes, absolutely so. This is the major artery shifting gasoline from the Gulf Coast refining hub into the main consuming hub in New York. Um. It's the pipeline that was hit yesterday. It flows from Houston to Greensboro, North Carolina, and then there are some connecting lines that Hallett Field north to

New York. So. Um. This explosion comes about uh six or seven weeks after another spill in September that shut the line for twelve days. Um. So Um. They were working on the pipeline, working to make some repairs after that spill, and it looks like in the midst of that work, UM, a track ho was doing some digging and it hit the line. And I'm right now colonial pipeline has shut down. Both of the main lines that ship gasoline and diesel up to the Northeast. And I

just want to correct myself. I believe gasoline is higher on the nymex It is higher dollar fifty three a gallon. Right now on the n I mix up eight and a quarter percent. I beg your pardon. Yeah, that was a flash jump yesterday on the news. M Gasoline traders here in the US that I speak to, we're up all night trading. Um. This looks like at this point it's all speculation, but this line could be shut down for several weeks, which would have a huge, huge impact

on drivers in the Northeast stand Eastern Seaboard. So pair this with the dynamic that's the opposite dynamic over in the Middle East, where it seems like perhaps OPEC will struggle to get some agreement together on limiting UH limiting output. Um, and there is evidence that US stockpiles are increasing. I mean, does this materially eat into those stockpiles and potentially UH

put a floor under oil prices regardless of an opaque agreement. Yes, I think it would actually because I'm at this point, Um, the gasoline that's normally produced in the Houston area is going to be trapped down here in the Gulf Coast, so we're going to have less need for the crude supplies to process into gasoline, So we're going to see demand drop for oil in this area. We're already seeing some of the Louisiana light sweet um crude going down

because the demand is going to be lower. So, you know, it's interesting because oil westex oil spot price right now does not appear to be moving that much. It seems like both factors are kind of working at odds. I mean, how will this sort of work itself out, which which one will win? At this point, it looks like gasoline will win. Um. If you look at the price of gasoline relative to w t I that has surged as well. And fundamentally, this is the gest issue in the US

that we've seen probably since Superstorm Sandy or Katrina. UM. So as Americans love to drive, you know, we're going to see that this is going to be driving the market in the next couple of weeks. And just to to add to your reporting, uh Laura, that that one person has been killed and five others injured in this in this explosion, we don't know the fate of those Uh, injured, of course, a terrible accident. Is Is there any redundancy

built into this system? Laura, UM, it's really a very very important pipeline that UM, we don't see too much. Didn't they know there's another pipeline called the Plantation that supplies UM about half as much gasoline as Colonial and UM there's some other US laws that restrict barges or tankers from moving gasoline from Houston up to the Atlantic coast. So we're going to have to turn to Europe the

other four in origins for those supplies. Laura Blewett, Bloomberg first word oil reporter, Thank you so much for being with us. This is something that we'll have to keep an eye on to see how long it will take before this oil this gasoline will continue to be pumped, and how long it'll take it to get it back online. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at iTunes, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm

out there on Twitter at pim Fox. I'm out there on Twitter at Lisa Abramo. It's one before the podcast. You can always catch us worldwide on Bloomberg Radio.