# SpaceX Wants Fee Cut From Bankers Chasing $500 Million Windfall

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 2 Jun 2026, 22 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7f534b8c-9e91-429a-b102-ae3c00090c6d/f062c30f-cf18-43be-8e3d-b45d0119154b/audio.mp3?utm_source=Podcast&in_playlist=0ad812bf-fd15-4012-a18c-ae3c00090c76

Watch Paul and Scarlet LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Intelligence hosted by Paul Sweeney and Scarlet Fu -Sri Natarajan, Bloomberg News Chief Wall Street Correspondent, discusses Elon Musk’s SpaceX negotiating to pay less than 0.75% for the $75 billion it aims to drum up in an initial public offering this month. -Matthew Bloxham, Bloomberg Intelligence Senior and Tech Analyst, discusses Google parent Alphabet raising $80 billion through a package of equity offerings, including an investment deal with Berkshire Hathaway. -Mary Ross Gilbert, Bloomberg Intelligence, Senior Equity Analyst, Covering Retail, discusses earnings from Victoria's Secret. Victoria’s Secret shares soared after the company beat earnings estimates and boosted its outlook, adding to signs of progress for Chief Executive Officer Hillary Super’s turnaround plan. -Woo Jin Ho, Bloomberg Intelligence Senior Hardware and Networking Analyst, discusses Hewlett Packard Enterprise shares soaring after the company gave an outlook for annual sales that topped Wall Street’s estimates, citing massive growth in AI-fueled demand for its servers and networking. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
[0:10] Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
[0:14] Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg
[0:17] Speaker 1: Business App. Listen on demand wherever you get your podcasts,
[0:21] Speaker 1: or watch us live on YouTube.
[0:24] Speaker 2: And a lot of the outlook of the markets will
[0:25] Speaker 2: depend on how this SpaceX mammoth IPO proceeds. Pricing could
[0:31] Speaker 2: take place next week, and then the stock could begin
[0:33] Speaker 2: trading potentially the day after. Shrinat Rajen is our chief
[0:37] Speaker 2: Wall Street course wanting here at Bloomberg News, and he's
[0:40] Speaker 2: looking at Paul's favorite angle of IPOs, which is banks
[0:44] Speaker 2: and banks getting paid to take this company public and tree.
[0:47] Speaker 2: Your reporting has found that Elon Musk is negotiating to
[0:52] Speaker 2: cut down the fees that bankers normally get paid. What
[0:55] Speaker 2: do bankers normally get paid? And what does Elon Musk
[0:57] Speaker 2: want to pay them?
[0:58] Speaker 3: Look, if you think about it in some way, SpaceX
[1:01] Speaker 3: is the Walmut of IPOs, right. It has all the
[1:03] Speaker 3: pricing power here. It is raising seventy five billion dollars,
[1:06] Speaker 3: So you shouldn't expect a typical IPOFEE. And to your question,
[1:10] Speaker 3: what a typical ipofee is most IPOs generally tend to
[1:13] Speaker 3: raise less than a billion dollars a few hundred million dollars,
[1:16] Speaker 3: and the banks would usually charge between four to seven percent.
[1:19] Speaker 3: But even when we talk about the League of mega IPOs,
[1:22] Speaker 3: that fee does get reduced drastically. But even in most
[1:26] Speaker 3: of those cases, almost all of those cases are usually
[1:28] Speaker 3: about one percent. That was the case with Facebook Uber
[1:31] Speaker 3: Ali Baba. You have to go back perhaps to twenty
[1:34] Speaker 3: twenty twenty ten and a very unusual public listing of
[1:38] Speaker 3: General Motors back in twenty ten, when the banks agreed
[1:41] Speaker 3: to a zero point seventy five percent fee on that IPO,
[1:45] Speaker 3: largely because the owner of GM at the time was
[1:47] Speaker 3: the United States government.
[1:49] Speaker 4: This is very different.
[1:50] Speaker 3: But also look at the quantum of money that SpaceX
[1:54] Speaker 3: is trying to raise. Seventy five billion dollars. So even
[1:56] Speaker 3: if they charge one of the lowest or offer one
[2:00] Speaker 3: of the lowest IPO fees on record, less than seventy
[2:04] Speaker 3: five bibs, less than zero point seventy five percent, I
[2:06] Speaker 3: would still amount to somewhere in the ballpark of five
[2:08] Speaker 3: hundred million dollars. And Paul will tell you that is
[2:11] Speaker 3: a pretty good payday for banks.
[2:13] Speaker 4: And this is how the road show is going to go.
[2:15] Speaker 5: It's like, I just want to hear Elon, give me
[2:18] Speaker 5: the vision, give me the pitch.
[2:19] Speaker 4: I don't need the CFO.
[2:22] Speaker 5: Total dress ball market. I don't need to talk about evaluation.
[2:25] Speaker 5: None of that's relevant. It's buy Elon's vision. And if
[2:30] Speaker 5: I'm Eli, I'm like, what am I paying you that for?
[2:31] Speaker 5: Can you have anything for that?
[2:33] Speaker 4: So any pushback on the banks by the banks.
[2:36] Speaker 5: On this or are they just looking at the long
[2:38] Speaker 5: game and saying this is Elon Musk and there's a
[2:39] Speaker 5: lot of business here.
[2:41] Speaker 3: The latter, Yes, yes, and yes that is. I cannot
[2:44] Speaker 3: imagine a scenario where the banks have a lot of
[2:46] Speaker 3: position to push back. You already have twenty three banks
[2:49] Speaker 3: signed up for this, and again five hundred million dollars.
[2:51] Speaker 3: You're talking about the lead banks getting probably rough one
[2:54] Speaker 3: hundred million dollars a year, that's my guess, and it
[2:56] Speaker 3: trickles down from there. But as everyone who's anyone is
[2:59] Speaker 3: signed up for this because you don't want to miss
[3:00] Speaker 3: out on the biggest IPO that matters.
[3:02] Speaker 2: Okay, twenty three banks sign up for this, Why does
[3:05] Speaker 2: SpaceX need twenty three different banks to help it sell this.
[3:08] Speaker 3: Ipocover every corner of possible investors and make sure you
[3:12] Speaker 3: can get to your one point eight perhaps even the
[3:14] Speaker 3: two two point two trillion dollar valuation. Of course, our
[3:16] Speaker 3: reporting shows that the bankers have been dialing it back
[3:19] Speaker 3: on what the potential valuation could be for SpaceX. But
[3:23] Speaker 3: all of these banks will serve a different purpose. You
[3:26] Speaker 3: can see someone like a City Group perhaps tap to
[3:29] Speaker 3: go after retail investors overseas because of their strengthen those markets,
[3:33] Speaker 3: or a Bank of America looking at retail investors in
[3:36] Speaker 3: the United States Common Sachs Morgan Stanley, JP Morgan. These
[3:39] Speaker 3: are the banks that will be really strong with the
[3:40] Speaker 3: big institutional investors investors, like say a Black Croc in
[3:45] Speaker 3: the United States, or the Saudi Sovereign fun PIFF. These
[3:49] Speaker 3: are some of the names that are already out there,
[3:50] Speaker 3: But these are the names that these big banks have
[3:53] Speaker 3: to arrange and make sure that they're able to line up.
[3:56] Speaker 3: Because even if it's Elon Musk and even if you
[3:59] Speaker 3: believe this multiplanetary Grand Vision, seventy five billion dollars is
[4:04] Speaker 3: seventy five billion dollars on the back of the surprise
[4:08] Speaker 3: stealth eighty billion dollars raised by Google. There's so much
[4:11] Speaker 3: money going around, so it's kind of extraordinary what's happening
[4:14] Speaker 3: in this market. In a span of ten days, if
[4:17] Speaker 3: everything goes right, Goldman, Morganzini and the others would have
[4:20] Speaker 3: raised over one hundred billion dollars in new equity. I
[4:24] Speaker 3: can't think of a quarter where they would have raised
[4:26] Speaker 3: that much, or even the six months gotten to Anthropic
[4:28] Speaker 3: or open A having it.
[4:30] Speaker 5: So you got to get ready. When are we going
[4:33] Speaker 5: to get the road show schedule? So I'm not that
[4:35] Speaker 5: in my inbox because I'm the first person you're going
[4:37] Speaker 5: to afford it to. When are we going to get that?
[4:39] Speaker 3: You will be the first person I have forwarded to
[4:41] Speaker 3: when I get it and when I have a better
[4:43] Speaker 3: sense do we.
[4:43] Speaker 5: Have any idea when that's going to be made available?
[4:46] Speaker 5: Like are they going to Boston? Are they going to London?
[4:47] Speaker 5: And they can do a rubber check in lunch here
[4:49] Speaker 5: in New York? Do we know any of that stuff?
[4:50] Speaker 3: I mean, imminent has to be the best on seeing
[4:53] Speaker 3: considering they want to very cris next week they're playing
[4:56] Speaker 3: a very trace of the best. Or it could also
[4:57] Speaker 3: mean that I just don't know.
[4:59] Speaker 4: It could be.
[4:59] Speaker 2: I don't with the timeline here that we've been reporting
[5:02] Speaker 2: according to our understanding, is pricing next Thursday, correct, Okay,
[5:06] Speaker 2: and always, always, always to stock them begins training the
[5:09] Speaker 2: following day.
[5:10] Speaker 3: That's the goal that's so up and usually that's what happens.
[5:12] Speaker 3: And again, these things can move around a day or two.
[5:15] Speaker 3: But when you're talking about one point in a trillion,
[5:16] Speaker 3: when you're talking about colonizing Mars, there's the day here
[5:19] Speaker 3: or that really matter.
[5:20] Speaker 4: It touches just thirty seconds on the Google. What's the
[5:23] Speaker 4: buzz out there in the marketprice about the Google deal?
[5:25] Speaker 6: And nobody expected that?
[5:26] Speaker 4: What a surprise move.
[5:27] Speaker 3: We've all been talking about this seventy five billion dollar raise,
[5:30] Speaker 3: the largest public listing on record, and out of nowhere
[5:33] Speaker 3: Google comes across. And it's hard to compare the data
[5:36] Speaker 3: because of the different chanches that are involved in this
[5:38] Speaker 3: eighty billion dollar that Google is raising. But if I
[5:41] Speaker 3: had to stick my neck out, I would think that
[5:43] Speaker 3: this is the largest equity raise ever you have. Berkshire's
[5:46] Speaker 3: the anchor investor, a bingchunk that gets priced today, another
[5:49] Speaker 3: piece that gets priced in a few weeks.
[5:52] Speaker 4: Eighty billion dollars. Never seen anything like that old.
[5:55] Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.
[6:02] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[6:06] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[6:09] Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
[6:12] Speaker 1: you get your podcasts, or watch us live on YouTube.
[6:16] Speaker 5: Anthropic is they filed first? It seems like they beat Chat, GPT,
[6:20] Speaker 5: whatever that thing is, Open ai, all that kind of
[6:23] Speaker 5: stuff coming to the public markets.
[6:25] Speaker 4: I guess it's a little bit of a race.
[6:26] Speaker 2: To Yeah, and it definitely feels like open ai has
[6:28] Speaker 2: lost the momentum with the trial, the court case between
[6:31] Speaker 2: Elon Musk and Sam Altman, and Anthropic is all that
[6:34] Speaker 2: anyone's talking about, right Claude over Chat, GPT, YEP all
[6:37] Speaker 2: day long.
[6:38] Speaker 4: Matthew Bloxham joints us here.
[6:39] Speaker 5: He's the senior media tech analyst for Bloomberg Intelligence based
[6:42] Speaker 5: over there in London.
[6:44] Speaker 4: Matthew, what do you expect?
[6:45] Speaker 5: I mean, we're gonna get SpaceX kicking off Thursday.
[6:48] Speaker 4: Presumably of the road show. But let's talk about Anthropic here.
[6:52] Speaker 5: These two big AI IPOs that are coming down the
[6:56] Speaker 5: pike here what do you think investors are gonna be
[6:59] Speaker 5: looking for.
[7:02] Speaker 7: Well, I think with an anthropic, you know that they're
[7:05] Speaker 7: just kind of looking for as much detail as they
[7:07] Speaker 7: can get about the kind of revenue model, the momentum
[7:12] Speaker 7: behind it. Obviously, we've been hearing data points recently that
[7:14] Speaker 7: you know, we're kind of back end of last year
[7:17] Speaker 7: that maybe the annualized revenue run rate was around the
[7:19] Speaker 7: kind of ten billion dollar market could be closer to
[7:22] Speaker 7: fifty billion dollars by the end of the year, and
[7:25] Speaker 7: where they are on that pathway, and what the economics
[7:29] Speaker 7: of the business looked like.
[7:31] Speaker 8: Yes, it's similar to space. You know, you just kind
[7:33] Speaker 8: of live off.
[7:34] Speaker 7: Breadcrumbs and suddenly you get a big download of data
[7:37] Speaker 7: that kind of really helps you to understand the business
[7:39] Speaker 7: model more.
[7:40] Speaker 2: Matthew, we characterize open ai and Anthropic as being in
[7:45] Speaker 2: a race, but is it actually like that if you
[7:48] Speaker 2: have Anthropic going public before open Ai, does that mean
[7:51] Speaker 2: there's less demand for open AI's IPO.
[7:54] Speaker 7: Yeah, you know, I think it's definitely right to characterize
[7:57] Speaker 7: this as the race, regardless of what the companies might say.
[8:00] Speaker 7: You know that these are huge numbers that companies are raising.
[8:04] Speaker 7: Me we don't know yet how much either of these
[8:06] Speaker 7: companies will look to raise, but you know, if SpaceX
[8:08] Speaker 7: is looking to raise seventy five billion and Google's out
[8:11] Speaker 7: there looking to raise eighty billion, it's going to be
[8:14] Speaker 7: in the tens of billions of dollars. And there's only
[8:16] Speaker 7: so much capital out there, and so, you know, I
[8:20] Speaker 7: think it's definitely better to go earlier than later, because
[8:24] Speaker 7: if you go later, you're at risk that either the
[8:28] Speaker 7: capital flow is dried up, or that those IPOs that
[8:31] Speaker 7: went before you didn't go so well, or the market's
[8:34] Speaker 7: taken a bit of a turn, and so you're kind
[8:36] Speaker 7: of left, you know, maybe either having to accept a
[8:38] Speaker 7: lower evaluation or a small amount of money. So I
[8:42] Speaker 7: think going sooner it is always better than going later
[8:46] Speaker 7: when you're raising money.
[8:48] Speaker 4: I'm an old ev to ebit that guy.
[8:49] Speaker 5: Maybe I'll go a little price to free cash flow.
[8:52] Speaker 4: But I don't know how you're going to value.
[8:54] Speaker 5: This these AI stories based out the market is going
[8:57] Speaker 5: to be valuation sensed at all?
[9:00] Speaker 4: Or is it just you take what you get.
[9:04] Speaker 8: I think it's a little bit of both. But I mean, yeah,
[9:07] Speaker 8: you know, I mean, we what have we got to
[9:08] Speaker 8: play with? Nothing?
[9:09] Speaker 7: Really more than ev to sales, and they're pretty eyewatering multiple. Yeah,
[9:14] Speaker 7: even on that kind of forward multiple trillion dollars, anthropics
[9:19] Speaker 7: going to be on about twenty time sales. So yeah,
[9:22] Speaker 7: you are having to extrapple extrapolate many years out to
[9:27] Speaker 7: kind of reconcile that with any bit dar musciple or
[9:31] Speaker 7: and earnings multiple. And there's clearly a huge number of
[9:35] Speaker 7: assumptions you're having to put in to get to those
[9:37] Speaker 7: kind of forward estimations. So yeah, it's it's a kind
[9:42] Speaker 7: of a moonshot trade, real, isn't it That you know,
[9:44] Speaker 7: you're kind of buying into the fact that, in some way,
[9:47] Speaker 7: shape or form, these companies that are coming to market
[9:49] Speaker 7: are going to be the foundational businesses of the next
[9:53] Speaker 7: thirty forty to fifty years of technology. And yeah, you
[9:58] Speaker 7: know it's going to work out eventually.
[10:01] Speaker 2: For you remember peg ratios and eyeballs and all the
[10:05] Speaker 2: different metrics that used to come up with during the
[10:07] Speaker 2: dot com bubble days. It feels like a total addressable
[10:10] Speaker 2: market is a new one for this era. So, Matthew,
[10:14] Speaker 2: before we say goodbye to you, as people investors get
[10:18] Speaker 2: ready to partake in these IPOs, they're likely going to
[10:22] Speaker 2: lighten up in some of their exposure to existing TACH
[10:25] Speaker 2: holdings because otherwise they have too much concentration risk. What
[10:28] Speaker 2: kinds of companies are most at risk?
[10:29] Speaker 8: Then? Yeah, I mean it's a good question, isn't that.
[10:34] Speaker 7: I mean, you know, it could be everything from like
[10:39] Speaker 7: you know, and video TSMC. You know, I think you're
[10:44] Speaker 7: kind of clearly going to be needing to think about
[10:46] Speaker 7: companies where you have had great performance and that perhaps
[10:50] Speaker 7: you're kind of prepared to do a bit of profit taking,
[10:53] Speaker 7: maybe taking the view that actually, you know, even if
[10:55] Speaker 7: you sell a bit of Nvidia intrinsically, you're kind of
[10:59] Speaker 7: going to get some benefit and some indirect exposure by
[11:02] Speaker 7: kind of playing it through one of these other names.
[11:04] Speaker 8: So yeah, it's a tricky one.
[11:06] Speaker 7: But I think probably a lot of portfolios are already
[11:09] Speaker 7: inherently kind of fairly concentrated. So you know, given the
[11:13] Speaker 7: numbers we're talking about, you're going to be helping to
[11:15] Speaker 7: look at these like meg A cappams to kind of
[11:17] Speaker 7: trip exposure.
[11:20] Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this.
[11:25] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live
[11:28] Speaker 1: weekdays at ten am Eastern on Apple, coarcklay and Android
[11:31] Speaker 1: Auto with the Bloomberg Business app, Listen on demand wherever
[11:35] Speaker 1: you get your podcasts, or watch us live on YouTube.
[11:39] Speaker 5: Well, we've been talking about Victoria's Secret all morning. Some
[11:42] Speaker 5: really really strong numbers beat the street pretty handily, and
[11:46] Speaker 5: we're seeing a stock of forty five percent here today.
[11:49] Speaker 4: So that's a good news there.
[11:50] Speaker 5: Mary Ross Gilbert, she covers the retailers for Bloomberg Intelligence.
[11:54] Speaker 4: Mary will talk to us about Victoria's Secret. What seems
[11:57] Speaker 4: like a huge turnaround.
[11:57] Speaker 9: There, Paul, you're at absolutely right. Hillary super is really
[12:02] Speaker 9: executing supremely her team, you know Hillary and her team.
[12:07] Speaker 9: So when you look at the results today, the comparable
[12:10] Speaker 9: sales were up thirteen percent. Now, remember they are cycling
[12:15] Speaker 9: declines of comp sales in the first quarter for like
[12:18] Speaker 9: the past three to four years, so that is helping. Still,
[12:23] Speaker 9: this is a big increase, seeing a double digit increase
[12:25] Speaker 9: in comp sales. But it's not just that. It's also
[12:28] Speaker 9: they're selling more at full price. They're attracting a younger cohort.
[12:33] Speaker 9: So the eighteen they saw a lot of strength in
[12:36] Speaker 9: eighteen to twenty four year olds, but they also saw
[12:40] Speaker 9: strength in households earning under fifty thousand and households earning
[12:45] Speaker 9: over two hundred thousand. So that's really saying something about
[12:50] Speaker 9: what's happening here with the brand. So they have great
[12:53] Speaker 9: franchises that they've created, So they have like the Dream
[12:56] Speaker 9: Angels and you know a lot of these are the
[12:58] Speaker 9: innovative lines that they've come out with in bras. You know,
[13:02] Speaker 9: their lace collection is hugely popular, you know, within Pink.
[13:07] Speaker 9: The turnaround at Pink has been phenomenal and it's really
[13:10] Speaker 9: resonating there. I mean, they have these tots that are
[13:13] Speaker 9: selling out, so SATs well we're talking about tots specifically
[13:20] Speaker 9: within the Pink franchise, but yes, Victoria's Secret also has tots,
[13:26] Speaker 9: but Pink does as well. And there were a number
[13:29] Speaker 9: of pieces for Spring in summer that sold out, including
[13:34] Speaker 9: a really cool Duffel bag. So they're really hitting the mark.
[13:37] Speaker 9: You know, they have this wonderful fragrance and beauty franchise
[13:41] Speaker 9: that's like a two billion dollar business and they saw
[13:44] Speaker 9: strength and double digit gains across you know, all categories,
[13:48] Speaker 9: and the momentum should continue in the second half. So
[13:52] Speaker 9: it appears that the guidance, which is really going to
[13:55] Speaker 9: be sort of drawn back to more single digit gains.
[14:00] Speaker 9: Really looks like they could be beatable. There's going to
[14:02] Speaker 9: be some product launches in the second half. They're going
[14:05] Speaker 9: to really heat up the campaigns and all of that
[14:09] Speaker 9: is really I mean, did you know that Victoria's Secret
[14:13] Speaker 9: has seventy seven million Instagram followers?
[14:16] Speaker 4: Okay, that is news.
[14:17] Speaker 2: But I'm looking at Pousweny and he's going to tell
[14:20] Speaker 2: me that he's not surprised given that Victoria's Secret used
[14:23] Speaker 2: to be a big, big brand, you know, with the
[14:26] Speaker 2: fashion shows and everything. Is that something that the CEO
[14:29] Speaker 2: Hillary Sooper is going to bring back? I mean, the
[14:31] Speaker 2: company now has the momentum or has a company effectively
[14:35] Speaker 2: moved away from that former profile.
[14:38] Speaker 9: Well, let's make it clear. And the reason why their
[14:41] Speaker 9: ticker symbol vsx Y very sexy, right, I mean it's important.
[14:47] Speaker 9: That's a big part of the Victoria's Secret brand franchise
[14:51] Speaker 9: is sexiness. And so Scarlett speaking to the fashion show,
[14:55] Speaker 9: the fashion show is already back. They had a great,
[14:59] Speaker 9: my bad show last year. That's okay, and this year
[15:04] Speaker 9: I'm sure it's going to be great. It's much more inclusive.
[15:07] Speaker 9: It's from a woman's point of view on you Know
[15:10] Speaker 9: What is Sexy and it's really a fantastic show. But
[15:16] Speaker 9: they also have a number of other campaigns that they do.
[15:19] Speaker 9: They do a lot in New York City, just on
[15:22] Speaker 9: the street and they post it on social media. All
[15:25] Speaker 9: of those things are resonating and you see a lot
[15:28] Speaker 9: of strong sales within the stores. The culture there, I
[15:31] Speaker 9: think has always been very positive because employees who work
[15:35] Speaker 9: there love their jobs, and you would experience it if
[15:38] Speaker 9: you go in there. They'll they're so engaging, they help
[15:42] Speaker 9: you out, they know how to size you, and they
[15:45] Speaker 9: show you so much of their product, and so I
[15:47] Speaker 9: think they get a lot of conversion with that kind
[15:50] Speaker 9: of engagement in the stores.
[15:53] Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this.
[16:00] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[16:04] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[16:07] Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
[16:10] Speaker 1: you get your podcasts, or watch us live on YouTube.
[16:14] Speaker 4: And I saw the blowout Dell earnings last week.
[16:17] Speaker 5: Did I run out and buy HPE stock Hewlett Packard
[16:21] Speaker 5: like a direct competitor?
[16:22] Speaker 8: Know?
[16:23] Speaker 5: And what an HPE do yesterday blowout numbers. Stocks up
[16:26] Speaker 5: twenty five percent today fifty two week high, all time high.
[16:31] Speaker 4: So there you go.
[16:32] Speaker 5: The AI story is a live and well and that's
[16:35] Speaker 5: part of the tech stack.
[16:36] Speaker 4: Who Jinho joins is he knows what's going on there.
[16:38] Speaker 5: He's a senior technology channels, a Bloomberg intelligence down there
[16:41] Speaker 5: in our Princeton campus which talk to us about HPE.
[16:44] Speaker 5: What did you learn from their results last night?
[16:46] Speaker 6: Yeah, hey, hey, Paul, blowout. As an understatement, there's a
[16:52] Speaker 6: couple of things going on. I think we're starting to
[16:55] Speaker 6: shift from a cyclical upswing to maybe a secular multi
[17:03] Speaker 6: year adoption phase for traditional servers, as corporate enterprises UH
[17:09] Speaker 6: start to adopt AI into the workplace, which may be
[17:13] Speaker 6: driving better margins as well as a stronger growth for
[17:17] Speaker 6: a longer period.
[17:19] Speaker 2: Let me ask a dumb question, moujen, what is the
[17:21] Speaker 2: difference between Heleett Packard Enterprise and hele Att Packard UH
[17:25] Speaker 2: trading their the ticker HPQ. I both are seeing benefits
[17:29] Speaker 2: tied to AI. But I just want someone to kind
[17:31] Speaker 2: of break it down.
[17:33] Speaker 6: Yeah, yeah, from a straightforward basis, Scarlett, if you think
[17:37] Speaker 6: about Heltt Packard UH inc UH, they only sell laptops
[17:42] Speaker 6: and PCs as well as a sizable printer business. Uh.
[17:47] Speaker 6: And that was a function of the split several years
[17:49] Speaker 6: back HPE Helip Hockard Enterprise.
[17:52] Speaker 5: Uh.
[17:53] Speaker 6: They sell servers for corporates as well, and data centers
[17:57] Speaker 6: that have AI data centers and and and and they said,
[18:00] Speaker 6: is one networking business for for corporate So think about
[18:03] Speaker 6: corporate it versus personal it.
[18:06] Speaker 5: Which how does HPE and Dell stack up in this
[18:10] Speaker 5: new world where again they're trying to take advantage of
[18:14] Speaker 5: this AI spin.
[18:15] Speaker 6: Yeah, so that there's a you know, there's a couple
[18:18] Speaker 6: of things where they're similar and where they differentiate. Look,
[18:23] Speaker 6: Dell is a market leader in AI servers. They're on
[18:27] Speaker 6: pace for about sixty billion dollars in AI servers and
[18:29] Speaker 6: stuff that they sell to the neo clouds such as
[18:31] Speaker 6: an IBS and core Weave and Vulture for instance. Right,
[18:37] Speaker 6: Dell HP's presence in that business isn't as sizable. They're
[18:42] Speaker 6: probably on pace for about six billions a one tenth
[18:44] Speaker 6: the size of Dell for this year. Where they where
[18:48] Speaker 6: they're both seeing the momentum is enterprise it.
[18:51] Speaker 4: Look, I think where.
[18:53] Speaker 6: The street, including myself have gotten it wrong was that
[18:56] Speaker 6: this memory inflation was going to impact demand right, there
[18:59] Speaker 6: was a big pull forward in demand, so we thought
[19:02] Speaker 6: for this quarter. We drove the upside in the quarter
[19:04] Speaker 6: as well as the next quarter, but we thought that
[19:06] Speaker 6: units were going to start dwindling. And what both Dell
[19:10] Speaker 6: as well as HPE confirmed was that this is going
[19:13] Speaker 6: to be durable and sustaining going over to the next
[19:16] Speaker 6: several quarters, which is driving not only sales growth but
[19:18] Speaker 6: also earnings growth.
[19:20] Speaker 4: When it comes to HPE.
[19:22] Speaker 2: They also announced that a partner at Elliott Investment Management,
[19:26] Speaker 2: Chris hu, would join the board of directors. I know,
[19:29] Speaker 2: last July is like a million years ago, especially when
[19:31] Speaker 2: you look at the stock price for HPE, but this
[19:34] Speaker 2: was a company that was engaging with activist investors. Is
[19:38] Speaker 2: it safe to say that Elliott's kind of happy with
[19:41] Speaker 2: what we've seen here?
[19:43] Speaker 6: I don't know, scarling twenty five percent stop going up
[19:46] Speaker 6: after turning the board, Elliots should be pretty happy and look,
[19:50] Speaker 6: to be fair, Elliott was highly involved with the Juniper
[19:54] Speaker 6: prior to the to the acquisition as well that I
[19:57] Speaker 6: believe they were a board member, so I'm not surprised.
[20:01] Speaker 4: Called with HPE.
[20:03] Speaker 5: What's the visibility on forward bookings for these companies like
[20:07] Speaker 5: the HP and Dell, do they How does that look
[20:09] Speaker 5: right now?
[20:10] Speaker 6: Yeah? So from a from a from a del Ai
[20:14] Speaker 6: service standpoint, it's it's fairly strong. Right. The backlog on
[20:18] Speaker 6: the AI service, I think it's closer to about twenty
[20:21] Speaker 6: seven to thirty billion dollars going forward, So they have
[20:24] Speaker 6: a fair amount of visibility. You know, they don't give
[20:27] Speaker 6: water bookings for the traditional server business. But one thing
[20:31] Speaker 6: that I can say about HPE is that these guys
[20:34] Speaker 6: gave at fiscal twenty twenty seven guidance. We're still in
[20:37] Speaker 6: the middle of their fiscal twenty twenty six, so six
[20:41] Speaker 6: quarters of forward guidance. That takes a lot of number
[20:45] Speaker 6: one guts, but also a strong confidence in their bookings
[20:50] Speaker 6: and their backlog to give that kind of guidance, and
[20:52] Speaker 6: on top of that with strong learnings growth. Their guidance
[20:55] Speaker 6: implies about four dollars plus in earnings when consensus was
[20:59] Speaker 6: at the high two news, so you know, to give
[21:03] Speaker 6: that the sales growth as well as earnings guidance, I
[21:05] Speaker 6: mean that's a lot of visibility.
[21:07] Speaker 2: Yeah, that is, and it's pretty incredible. I wonder to
[21:10] Speaker 2: what extent Paul, We're going to see other companies start
[21:12] Speaker 2: to do that because so far it isn't necessarily rewarded
[21:16] Speaker 2: companies that is for for looking that far out.
[21:18] Speaker 8: Yep.
[21:19] Speaker 5: What's the next thing we're looking for, which just in
[21:22] Speaker 5: terms of your world and to see kind of where
[21:25] Speaker 5: the demand is coming from.
[21:27] Speaker 6: Yeah, from from my world. Look, earnings is died down.
[21:30] Speaker 6: A couple of things that we're looking for. We have
[21:33] Speaker 6: the computext conference that's going on right now, so we've
[21:36] Speaker 6: seen some of the chip maker names benefit as well.
[21:39] Speaker 6: But there's going to be some AI server news as well,
[21:41] Speaker 6: about optics news. And then on top of that we
[21:45] Speaker 6: have some conferences, so we'll probably get a follow up
[21:47] Speaker 6: from HPE from their Discovery conference coming soon.
[21:51] Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify,
[21:56] Speaker 1: and anywhere else you get your podcasts. Listen live each
[22:00] Speaker 1: ten am to noon Eastern on Bloomberg dot com, the
[22:03] Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You
[22:07] Speaker 1: can also watch us live every weekday on YouTube and
[22:11] Speaker 1: always on the Bloomberg terminal

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.