# Amex Expenses Surge 12% as Marketing Costs for Cards Rise

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 24 Jul 2026, 24 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/2582e680-331b-474a-8e03-b491011528f9/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 Scarlet Fu and Alexis Christoforous -Ben Elliott, Bloomberg Intelligence Consumer Finance Analyst, discusses earnings from American Express. American Express Co. said second-quarter expenses surged 12% as it spent more on marketing to attract and retain premium cardholders. Chief Financial Officer Christophe Le Caillec anticipates marketing expenses to be up around 10% in the second half of 2026 from the same period a year earlier. -Kunjan Sobhani, Bloomberg Intelligence Senior Semiconductor Analyst, discusses Intel earnings. Intel Corp.'s quarterly report beat Wall Street estimates, but a major question remains about when the company will secure outside customers for its factories. Intel has been trying to transform itself into a foundry, but major customers for that operation have yet to materialize, with a signed external foundry customer not yet arriving. -Dan Ives, Partner and Senior Managing Director, Analyst at Yorkville Ives & Co, discusses Intel earnings and the latest in the tech space. -Geetha Ranganathan, Bloomberg Intelligence Analyst on US Media, discusses earnings from Charter Communications. Charter Communications shares fell after the cable company reported second-quarter results that missed expectations on key metrics, including adjusted Ebitda and free cash flow. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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[0:21] Speaker 1: or watch us live on YouTube.
[0:23] Speaker 2: Alexis and I were just talking about how we're both
[0:25] Speaker 2: AMEX cardholders. We're trying to figure out the most economical
[0:29] Speaker 2: way of transferring rewards points to your airline account and
[0:34] Speaker 2: not have to pay fees.
[0:35] Speaker 3: Yeah, if you find a way to do that without
[0:38] Speaker 3: paying fees, please do let me know because it just
[0:40] Speaker 3: it varies on how much you're going to pay to
[0:43] Speaker 3: do the transfer. But I feel like, you know, there's
[0:46] Speaker 3: a fee for almost everything you do.
[0:47] Speaker 2: You know what, you need to go on Reddit because
[0:49] Speaker 2: the folks on Reddit have like broken this down to
[0:51] Speaker 2: a science.
[0:52] Speaker 3: I'm doing all the details.
[0:53] Speaker 4: Let's bring in Ben Elliott.
[0:55] Speaker 2: He's our consumer finance analyst and he's going to talk
[0:57] Speaker 2: to us about American Express earnings. And Ben, the big
[1:00] Speaker 2: part of what we're seeing from an American Express is
[1:02] Speaker 2: how much it spends on marketing these cards to Alexis,
[1:06] Speaker 2: these cards to me, and you know, the Platinum card
[1:09] Speaker 2: in particular is like their big money maker because the
[1:11] Speaker 2: fees are almost eight hundred.
[1:12] Speaker 5: Dollars, that's right, Yeah, So it's sort of a you
[1:17] Speaker 5: got to spend money and make money scenario for AMEX, right.
[1:21] Speaker 5: And one of the challenges they're facing right now, which
[1:23] Speaker 5: you can see in the response to earnings today, is
[1:25] Speaker 5: that the expenses happen right away and the benefits take
[1:29] Speaker 5: a year or two to float through P and L.
[1:31] Speaker 5: So one of the things that I saw, I was
[1:33] Speaker 5: very optimistic in the earnings was management guided towards a
[1:38] Speaker 5: higher card feed growth in the third quarter and then
[1:41] Speaker 5: a higher run rate exiting twenty twenty four. And that's
[1:44] Speaker 5: just because mechanically, you know, they raise people's card fees
[1:48] Speaker 5: when they renew their card, right, So that's kind of
[1:51] Speaker 5: on a rolling basis, and they're still raising card fees
[1:54] Speaker 5: from the previous refresh of the mx plat so that's
[1:57] Speaker 5: going to keep rolling into P and L through next year,
[2:01] Speaker 5: and that will make some of the elevated expenses look
[2:04] Speaker 5: more palatable to investors.
[2:05] Speaker 3: I think, Ben, how is artificial intelligence part of the
[2:09] Speaker 3: American Express story right now? And did they talk about
[2:12] Speaker 3: it at all?
[2:12] Speaker 5: On the call. They talked about it on the call.
[2:15] Speaker 5: They talk about it quite a bit of regularity right now.
[2:18] Speaker 5: I think the biggest impact they're seeing is they're just
[2:22] Speaker 5: really a lot more efficient on the sort of the
[2:24] Speaker 5: tech stack modernization effort that's been ongoing for a long time.
[2:29] Speaker 5: But they would like to do things like agentic purchasing
[2:33] Speaker 5: AI travel agents, things like that, and they think that
[2:38] Speaker 5: that could add meaningfully to revenue and also be a
[2:41] Speaker 5: big positive on the expense side.
[2:44] Speaker 2: Your colleague, Nathan Dean is our senior policy analyst in Washington,
[2:48] Speaker 2: and he's been writing about how there's this credit card
[2:51] Speaker 2: Competition Act that hasn't made its way through Congress yet
[2:54] Speaker 2: but would supposedly require banks to offer two rival credit
[2:57] Speaker 2: card networks to their merchants, and that would potentially be
[3:00] Speaker 2: a threat to American Express, Visa MasterCard. Is this something
[3:05] Speaker 2: that the company is worried about is kind of working
[3:08] Speaker 2: around at this point positioning itself in any way.
[3:12] Speaker 5: I don't think that they're particularly worried about it yet.
[3:14] Speaker 5: I think that Nathan has some sort of tempered odds
[3:19] Speaker 5: on that, but I don't know his latest odds. You know, MX,
[3:25] Speaker 5: I think is such a sort of like lifestyle brand,
[3:30] Speaker 5: value proposition driven company that you know, if they had to,
[3:35] Speaker 5: for instance, off for like a Visa a MasterCard branded card,
[3:39] Speaker 5: it would impact the discount revenue sort of side of things.
[3:44] Speaker 5: But I imagine that they would still try it to
[3:49] Speaker 5: drive users towards their MX branded cards where they have
[3:52] Speaker 5: the full economics, and they could do something like, you know,
[3:56] Speaker 5: provide a more basic card on the Visa MasterCard network
[3:59] Speaker 5: and provide kind of like the higher end, the real
[4:02] Speaker 5: meat and potatoes of the business on their own proprietary network,
[4:05] Speaker 5: and that might be an offset. And there's also you know,
[4:07] Speaker 5: all kinds of other different ways to add fees and
[4:11] Speaker 5: you know, find other revenue sources that well couldn't call.
[4:14] Speaker 3: Those fees be I was talking to Scarlet off Mike
[4:18] Speaker 3: earlier about let's say, for instance, you have a bunch
[4:20] Speaker 3: of rewards points and you want to transfer them over
[4:22] Speaker 3: to an airline that you fly often. Amex does charge you,
[4:25] Speaker 3: at least in my experience, to make that transfer, and
[4:29] Speaker 3: I have to tell you when you're paying you know,
[4:31] Speaker 3: eight hundred dollars a year for a car. That doesn't
[4:33] Speaker 3: feel too good.
[4:33] Speaker 5: Ben, Yeah, I'm not sure exactly which program you're talking about.
[4:39] Speaker 3: But I was trying to get miles over to Delta
[4:43] Speaker 3: and was charged ninety nine bucks to do it, and
[4:46] Speaker 3: she's outraged, and yeah, I'm quietly outraged.
[4:49] Speaker 5: Interesting. I mean, that's like the flagship program. So I'm
[4:53] Speaker 5: not exactly sure the scenari you're talking about, but I
[4:56] Speaker 5: don't think that they would want to do something that
[4:57] Speaker 5: sort of negatively impacted partners. So that's probably not the
[5:02] Speaker 5: first fee that would be on the menu. But you know,
[5:05] Speaker 5: there are plenty of voys to bifurcate your audience and
[5:08] Speaker 5: still provide what Amex does provide now and then just
[5:11] Speaker 5: to have like some sort of add on that meets
[5:13] Speaker 5: any kind of new regulatory requirement.
[5:14] Speaker 2: I like the way you put that bifurkate the audience,
[5:16] Speaker 2: meaning if you upgrade to a better level the next
[5:19] Speaker 2: Welter card, maybe you won't be subject to the fees
[5:21] Speaker 2: that you just experience. And that kind of gets to
[5:24] Speaker 2: the heart of it, right Ben. I mean they can
[5:25] Speaker 2: slice and dices in very very thin slices.
[5:28] Speaker 5: Yeah, everything's about the platinum, So anything they can do
[5:31] Speaker 5: to drive more traffic to the Platinum I think will
[5:33] Speaker 5: in the end actually be in that positive even if
[5:36] Speaker 5: you know there's some sort of change in the business
[5:38] Speaker 5: model and they have to serve you know, maybe a
[5:40] Speaker 5: lower fight go borrower, maybe a broader audience. I don't
[5:42] Speaker 5: think it will affect the core audience who likes what
[5:45] Speaker 5: they have right now and they have to keep paying more.
[5:47] Speaker 2: For it, and just very quickly for the American Express
[5:50] Speaker 2: card holders, like maybe those who come in down the
[5:52] Speaker 2: introductory card, like the you know, blue card, do they
[5:56] Speaker 2: tend to stick with AMX so they kind of go
[5:59] Speaker 2: along with the brand and make it all the way
[6:01] Speaker 2: to platinum.
[6:03] Speaker 6: Yeah.
[6:03] Speaker 5: So I think seventy five percent of new customers are
[6:05] Speaker 5: coming onto a fee paying card already from the get go.
[6:09] Speaker 5: Sixty five percent of those are gen z and millennial,
[6:12] Speaker 5: and the company sees a gigantic lifetime value in those
[6:15] Speaker 5: consumers and explicit goal is to get those people to
[6:18] Speaker 5: spend more over their lifetime. And retention rates are crazy
[6:22] Speaker 5: high on the mx plat it's like almost one hundred percent,
[6:25] Speaker 5: so people basically never give up their card once they
[6:28] Speaker 5: get it.
[6:28] Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this.
[6:35] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live
[6:39] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[6:42] Speaker 1: Auto with the Blueberg Business app. Listen on demand wherever
[6:46] Speaker 1: you get your podcasts, or watch us live on YouTube.
[6:50] Speaker 2: Let's talk a little bit about Intel, because Intel shares
[6:53] Speaker 2: are down about four percent, and Alexis you were pointing
[6:56] Speaker 2: out earlier that the outlook was good and the results
[6:59] Speaker 2: looked dec and yet the stock, however, is that respecting?
[7:02] Speaker 3: Yeah, I mean like it was higher in the pre
[7:04] Speaker 3: market when I was doing the flashes on surveillance talking
[7:06] Speaker 3: about how Intel was rallying, and then once regular trading started,
[7:10] Speaker 3: stock is down.
[7:11] Speaker 2: All right, So let's check in with Konjoan Shobani. He
[7:13] Speaker 2: is our senior semiconductor analyst joining us from San Francisco.
[7:16] Speaker 2: Kunjohn explained to us what happened between the pre market
[7:19] Speaker 2: and they started regular trading when things looked fairly good
[7:23] Speaker 2: for Intel, and now clearly the market does not like
[7:27] Speaker 2: everything at seas with the latest set of results.
[7:30] Speaker 7: I mean, from our perspective, we liked everything we saw.
[7:33] Speaker 7: I mean, after quarters and quarters of facing hurdles and
[7:38] Speaker 7: you know, missteps, this was the finally the most cleanest
[7:42] Speaker 7: positive quarter from a fundamental perspective, they beat on all matrix.
[7:46] Speaker 7: But more important than that, they showcased a lot of
[7:49] Speaker 7: confidence in the foundry progress that they're making. If I
[7:53] Speaker 7: had to guess, what the you know, just a reaction
[7:56] Speaker 7: a few hours since since the market has opened. Is
[7:58] Speaker 7: could be just because some folks are not liking the
[8:01] Speaker 7: higher spending, which is going to be a headwind to
[8:04] Speaker 7: the free cash flow. Right, so, if you add on
[8:06] Speaker 7: everything positive that's happening, they were finally now getting to
[8:09] Speaker 7: a free cash flow which people are liking. But this
[8:12] Speaker 7: additional spending is again going to put a pause and
[8:15] Speaker 7: a lot of investors have been waiting to get this
[8:17] Speaker 7: positive free cash flow. But other than that, fundamentally everything
[8:20] Speaker 7: looks really good.
[8:22] Speaker 3: You know, earlier we were talking with Dan Ives about
[8:25] Speaker 3: this and about the hyperscalers that are going to be
[8:27] Speaker 3: reporting next week, and I'm curious, is there anything they
[8:30] Speaker 3: can say with regards to CAPEX spending on AI that
[8:33] Speaker 3: would please this market, because you would think if they're
[8:36] Speaker 3: spending too little, the market might not like it. If
[8:38] Speaker 3: they're spending too much, the market doesn't seem to like it.
[8:42] Speaker 7: Well, you got it spot on right. The investors insuredholders
[8:45] Speaker 7: of those hyperscalers don't like it when they spend a
[8:48] Speaker 7: lot of money, but the investors for the semi guys
[8:51] Speaker 7: that I cover, should like that higher number. In fact,
[8:54] Speaker 7: I mean, if we don't get a much higher number,
[8:57] Speaker 7: you know, those inventors might not like for the names
[8:59] Speaker 7: of NBDA, AMD, Intel and so forth. Because remember, the
[9:02] Speaker 7: higher the capex for the hyperscalers, that means the better
[9:05] Speaker 7: the probability of upside for the semi connected guys that
[9:08] Speaker 7: I cover.
[9:10] Speaker 2: So, Kanyam, would you say that the US government owning
[9:14] Speaker 2: a stake in Intel has been unequivocally good for the
[9:18] Speaker 2: company in the stock?
[9:20] Speaker 7: I mean, I don't see any direct correlation there, Like
[9:24] Speaker 7: they haven't done anything except for you know, investment, just
[9:27] Speaker 7: bringing in the liquidity and the cash flow. There's definitely
[9:30] Speaker 7: that credibility that you know, government likely won't let Intel fall,
[9:35] Speaker 7: But I think I would not give them a lot
[9:37] Speaker 7: more credit for what we're seeing in the stock. It
[9:39] Speaker 7: has been all been executions since the new CEO coming in,
[9:42] Speaker 7: and we are now seeing the fruits of that discipline
[9:45] Speaker 7: and the execution finally showing up.
[9:48] Speaker 3: I was looking a little more into the report and
[9:50] Speaker 3: also just taking a look at what some analysts had
[9:52] Speaker 3: to say. So, Intel, this is their strongest revenue growth
[9:55] Speaker 3: in more than fifteen years. This according to a City analyst,
[9:59] Speaker 3: what an is it all AI that's driving that right now?
[10:02] Speaker 3: Is it diversified in any way?
[10:05] Speaker 7: Well, it's mostly AI because again they're in the computer business,
[10:08] Speaker 7: right and anyone who is in that proportional business, it's
[10:12] Speaker 7: mostly AI. I think they reported a number that now
[10:14] Speaker 7: seventy percent of their total revenue in this quarter was
[10:18] Speaker 7: AI exposed or AI related in some shape or form.
[10:21] Speaker 7: But more importantly, what's driving it? You know, the tide
[10:24] Speaker 7: is lifting all boats. Everyone's enjoying that. But really what
[10:27] Speaker 7: the goodness came out in this quarter was again their
[10:30] Speaker 7: execution on the foundry and the reels are getting better,
[10:33] Speaker 7: costs are coming down. It's a supply constraint and environment
[10:36] Speaker 7: everywhere else, and Intel has its own supply, so when
[10:39] Speaker 7: they are able to bring up more volume, they're able
[10:41] Speaker 7: to sell more parts and drive higher revenue and charge
[10:45] Speaker 7: a lot more because again supply constraints. So any new
[10:47] Speaker 7: volume that they bring up, they're able to write now
[10:49] Speaker 7: charge a lot more higher prices.
[10:51] Speaker 4: Stay with us. More from Bloomeric Intelligence coming up.
[10:54] Speaker 1: After this, you're listening to the Bloomberg Intelligence Podcast. Catch
[11:02] Speaker 1: us live weekdays at ten am Eastern on Apple, Cocklay
[11:05] Speaker 1: and Android Auto with the Bloomberg Business App. Listen on
[11:08] Speaker 1: demand wherever you get your podcasts, or watch us live
[11:11] Speaker 1: on YouTube.
[11:13] Speaker 3: We want to talk earnings next week because they're going
[11:16] Speaker 3: to be dominated by the megacap hyper scalers. We're talking
[11:19] Speaker 3: meta Microsoft, Apple, Amazon and the like. And who better
[11:23] Speaker 3: to do that with than mister Dan Ives live in
[11:26] Speaker 3: our studios here in the air, Active Broker Studio partner
[11:28] Speaker 3: and senior managing Director, Yorkville Ives and Co.
[11:32] Speaker 8: Dan. Good to see you.
[11:34] Speaker 3: And you have an animal motif for those not watching
[11:37] Speaker 3: on YouTube. Animal motif ways is a tiger.
[11:40] Speaker 8: Tiger got a hat hat. So yeah, little little animal
[11:45] Speaker 8: motif me, I should brought a ball maybe soon.
[11:49] Speaker 7: I like that.
[11:49] Speaker 8: Animal spirits to the conversation.
[11:52] Speaker 3: We'll talk about next week in a moment, because I
[11:54] Speaker 3: want to talk about Intel right now. After the belly yesterday,
[11:57] Speaker 3: I'm on every metric. I thought blew it out of
[11:59] Speaker 3: the water, Yet Intel is down three percent.
[12:02] Speaker 8: Why do you think I think the reality is some
[12:05] Speaker 8: of these knee jerk reactions I think could be misleading
[12:09] Speaker 8: relative to the fundamentals, because what investors are looking at
[12:12] Speaker 8: here is what does demand look like for the AI revolution?
[12:16] Speaker 8: And look, Intel has become a huge barometer, and you
[12:20] Speaker 8: combine what we saw from Intel with the hyperscalurs, that
[12:24] Speaker 8: just gives you more confidence to what we're going to
[12:26] Speaker 8: see over the next week relative to cap backs, enterprise demand.
[12:30] Speaker 8: I think that's why it's very easy for investor. I
[12:32] Speaker 8: caught up sometimes in what the stocks do you know
[12:35] Speaker 8: a day after? But for Intel, I mean they've almost
[12:37] Speaker 8: become the comeback kid.
[12:39] Speaker 2: They have, Yeah, they definitely have, with a big helping
[12:42] Speaker 2: hand from the US government of course, and in video, yeah,
[12:44] Speaker 2: and in video. Okay, so let's talk about the hyperscalet
[12:47] Speaker 2: earnings that are coming up next week Alphabet. The knee
[12:49] Speaker 2: jerk reaction there was to sell it off yesterday down
[12:52] Speaker 2: almost seven percent. Today it's making a little bit of
[12:54] Speaker 2: a comeback, stabilizing two thirds of one percent. We've got Meta, Microsoft,
[12:59] Speaker 2: Amazon on all reporting next week. Are we going to
[13:03] Speaker 2: see a similar kind of outcome where they're going to
[13:07] Speaker 2: increase their capex and the return on investment, you know
[13:11] Speaker 2: through cloud sales for instance, is going to show that
[13:15] Speaker 2: they're getting some payoff, but investors bar are so high
[13:19] Speaker 2: right now that they're not going to be rewarded for it.
[13:22] Speaker 8: And I think the Alphabet reaction, you know, I think
[13:25] Speaker 8: that someone would say maybe head scratching because if you
[13:28] Speaker 8: saw the cloud growth, you look what they're doing across
[13:31] Speaker 8: the business, and then of course increasing capex. But as
[13:33] Speaker 8: we've talked about, this is an arms race. It's third
[13:36] Speaker 8: inning in the AI revolution, Microsoft, Amazon, Meta. No one's
[13:42] Speaker 8: going to slow capecs. Could you slow it down? You
[13:45] Speaker 8: get ultimately, you know, you're out of the line in
[13:48] Speaker 8: terms of when it comes to capacity. I think the
[13:50] Speaker 8: most important thing relative to tech earnings, to the market,
[13:55] Speaker 8: to these stocks is is demand accelerating. Our enterprise is
[14:00] Speaker 8: set toward what ultimates we monetization and use cases. And
[14:03] Speaker 8: in terms of the reactions, look, I think we've seen
[14:06] Speaker 8: you know, I think investors are definitely fickle and worrying
[14:09] Speaker 8: about We'll say, maybe patients wearing thin. But guess what,
[14:12] Speaker 8: Let's say Alphabet said we're cutting catacs exactly.
[14:16] Speaker 5: The market would freak out.
[14:18] Speaker 8: So that's why it's one where these companies are doing everybody.
[14:22] Speaker 8: They're not just spending like nineteen eightys rock stars for
[14:24] Speaker 8: no reason. They're spending because their customers are moving on
[14:30] Speaker 8: the hyperscos on the cloud with AI. That's why they're doing.
[14:34] Speaker 3: It's sort of like you're damned if you if you do,
[14:35] Speaker 3: and you're damned if you don't, right, because if you're not,
[14:37] Speaker 3: if you're not spending and keeping pace with the other
[14:39] Speaker 3: big hyper scalers with then what are you doing? But
[14:42] Speaker 3: if you're if you're spending a lot, they're still going
[14:44] Speaker 3: what are you doing?
[14:44] Speaker 8: But it's the you're building out the Vegas Strip in
[14:48] Speaker 8: nineteen fifty five, right, analogy. So the point is you
[14:52] Speaker 8: get one spot on the strip, if you pull back,
[14:56] Speaker 8: guess what, you're two miles where you're in Reno, right,
[14:59] Speaker 8: And that's how these companies are thinking.
[15:02] Speaker 2: Okay, so they want to make sure they have a
[15:03] Speaker 2: prime spot on the strip, and that means they need
[15:07] Speaker 2: to spend a lot of money. They also need to
[15:08] Speaker 2: raise a lot of money. They've been doing that in
[15:10] Speaker 2: the bond market. Are more companies going to do what
[15:13] Speaker 2: Alphabet did and tap the equity market as well?
[15:16] Speaker 8: I think it's it's going to be a tidal wave
[15:18] Speaker 8: now in terms of I think it's also that's going
[15:21] Speaker 8: to happen over the next six, twelve, eighteen months, because
[15:23] Speaker 8: the reality is, if they don't do it, despite whatever
[15:26] Speaker 8: the stocks do, they know they're out of the game
[15:30] Speaker 8: now investors, how are they going to react to that?
[15:33] Speaker 8: I would argue, see if you get Meta. Meta's last
[15:36] Speaker 8: quarter was basically increase capbacks, dog gate the homework. They
[15:40] Speaker 8: didn't show it Alphabet, they are showing it Microsoft, penalty Box,
[15:46] Speaker 8: prove me moving from Thedella. Each one's almost become idiosyncratic
[15:50] Speaker 8: relative to how they're treated. But the reality is investadors
[15:53] Speaker 8: are going from cap bax to monetization. That's the phase
[15:57] Speaker 8: we're in. But it's still early in terms of it's
[16:00] Speaker 8: all playing out, and for the first time in thirty years,
[16:02] Speaker 8: the US is ahead of China when it comes tech.
[16:06] Speaker 3: Apple is a different animal from the other companies we
[16:08] Speaker 3: were just talking about, and they're every day I feel
[16:10] Speaker 3: like they're saying, we're going to revamp another product in
[16:13] Speaker 3: our lineup again geared towards AI. So what can they
[16:17] Speaker 3: possibly say that's new When they come out with earning
[16:20] Speaker 3: sexty weeks.
[16:20] Speaker 8: Look for Apple, they finally now have an AI strategy.
[16:24] Speaker 8: It's not just talk and we talk about we start
[16:26] Speaker 8: a WWDC. It's not anthropic, it's not an open air.
[16:29] Speaker 8: They don't need to be that because they have the
[16:32] Speaker 8: install based on two point five billion iOS devices one
[16:35] Speaker 8: point five billion iPhones for them. Okay, it's really about
[16:40] Speaker 8: giving investors update on the deployment of the AI strategy
[16:45] Speaker 8: and then giving some sort of sense in terms of
[16:47] Speaker 8: what this iPhone seventeen. It has been a surprise upgrade
[16:51] Speaker 8: cycle and I think that's something you saw it even
[16:54] Speaker 8: on the AT and T numbers, and it's very important
[16:57] Speaker 8: for this broader market to stop. What's happening to the
[17:00] Speaker 8: stock investors are realizing Apple is basically they're going to
[17:05] Speaker 8: be the toll collector right on the consumer AI highway,
[17:09] Speaker 8: no matter which way.
[17:10] Speaker 3: Do we need a foldable Apple phone? That's my question, Dan, and.
[17:13] Speaker 8: Again Keenes talked about that, and I think, you know,
[17:15] Speaker 8: I know he's waiting for it, but I think it's
[17:17] Speaker 8: going to come by in their pocket.
[17:19] Speaker 6: Better.
[17:19] Speaker 2: It's not going to fall out of your pocket that way. Okay,
[17:21] Speaker 2: I'll be bulkier, but it won't fall out.
[17:24] Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this.
[17:31] Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
[17:35] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[17:38] Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
[17:41] Speaker 1: you get your podcasts, or watch us live on YouTube.
[17:45] Speaker 3: We want to talk about Charter Communications because this stock
[17:50] Speaker 3: taking it on the chin today, down about six and
[17:52] Speaker 3: a half percent after it's a quarterly earnings report. You
[17:55] Speaker 3: want to dig in a little more with geth i Roanganathan,
[17:58] Speaker 3: us media analyst for Bloomberg Intelligence, and she joins us
[18:01] Speaker 3: from our Princeton, New Jersey office. He's always good to
[18:04] Speaker 3: see you. I guess the top line here is they
[18:07] Speaker 3: did it again. Revenue declining once again at Charter as
[18:11] Speaker 3: subscriber growth continues to slide. What else in this report
[18:16] Speaker 3: did Wall Street not like?
[18:20] Speaker 6: Thanks so much Alexis for having me. So really, this
[18:23] Speaker 6: story is, you know, we've seen this movie before, and
[18:26] Speaker 6: just the story just keeps getting worse and worse every quarter.
[18:30] Speaker 6: So you know, Charter, as you may know, is going
[18:33] Speaker 6: to very soon be the largest broadband provider in the
[18:37] Speaker 6: United States after it closes on its Cocks deal, which
[18:40] Speaker 6: will happen in the next couple of weeks time. And really,
[18:43] Speaker 6: the story for this company has been this persistent loss
[18:46] Speaker 6: in broadband subscriptions. And what Wall Street did not like
[18:50] Speaker 6: this quarter was that not only did we see a
[18:52] Speaker 6: deterioration in those subscribers trends, which was losses much worse
[18:57] Speaker 6: than what we had initially projected, but all so along
[19:00] Speaker 6: with that, we are seeing this tremendous pressure on broadband rpooh,
[19:05] Speaker 6: which is causing declines in ebit DAH and so just
[19:09] Speaker 6: you know, as you kind of think about the growth
[19:11] Speaker 6: outlook for this company over the next few years, there
[19:14] Speaker 6: is just no turnaround in sight, and that is making
[19:17] Speaker 6: investors extremely nervous.
[19:20] Speaker 3: Now there were bright spots here, no, I mean they
[19:23] Speaker 3: did add I guess subscribers on the mobility end of things.
[19:27] Speaker 3: How is that going?
[19:29] Speaker 6: Yeah, So, you know, this is a story that we're
[19:31] Speaker 6: seeing across a lot of the cable providers. So both
[19:33] Speaker 6: Charter and Comcast introducing their mobile product, which is Spectrum
[19:37] Speaker 6: Mobile and Exfinity Mobile, and we've seen a lot of
[19:40] Speaker 6: success with this. And really what these cable providers have
[19:42] Speaker 6: done very creatively is that they're bundling their mobile solutions
[19:46] Speaker 6: with broadband. Really the big picture here is they're trying
[19:49] Speaker 6: to retain those broadband subscribers as well as attract new
[19:53] Speaker 6: ones by bundling in mobile, and you know, people kind
[19:57] Speaker 6: of like that, so that you do have quite a few,
[20:00] Speaker 6: you know, new subscribers kind of signing on. Because if
[20:02] Speaker 6: you actually look at the market out there, the wireless market,
[20:06] Speaker 6: you know, Spectrum Mobile is priced very very competitively, much
[20:10] Speaker 6: much more competitively than the big three, and that is
[20:13] Speaker 6: what is helping them kind of gain subscribers. But remember,
[20:16] Speaker 6: you know, they have about ten to twelve million subscribers
[20:20] Speaker 6: versus you know, we're comparing it with Verizon and an
[20:23] Speaker 6: Ant and T and T Moore, which have hundreds of
[20:25] Speaker 6: millions of subscribers. So you know, again it's it's small potatoes,
[20:28] Speaker 6: but yes, there are some bright spots.
[20:30] Speaker 3: What about some of its competitism. I guess we heard
[20:33] Speaker 3: from Comcast this week quite a different story. But then
[20:36] Speaker 3: I guess you could also argue Comcast is a lot
[20:38] Speaker 3: more diversified than a charter communications.
[20:42] Speaker 6: Yeah, so actually for Comcast there, you know, it's it's
[20:46] Speaker 6: kind of ironic Alexis because they've always been punished because
[20:50] Speaker 6: they were not a pure play cable company. They had
[20:53] Speaker 6: this media operation with NBC which and which they never
[20:57] Speaker 6: really got credit for, and actually, in order to kind
[20:59] Speaker 6: of simplify the story and get more value for their
[21:04] Speaker 6: media business, they announced that they will be separating out
[21:08] Speaker 6: those media operations, which will happen sometime in twenty twenty seven.
[21:12] Speaker 6: But you have the cable business that has really come
[21:15] Speaker 6: under tremendous pressure, and we're seeing that both you know,
[21:17] Speaker 6: with Comcast as well as Charter. Comcast is slightly better
[21:21] Speaker 6: because again they have that divers diversification as you pointed
[21:24] Speaker 6: out with media, but cable valuations if you just track
[21:26] Speaker 6: them over the past four years of Alexis, I mean,
[21:29] Speaker 6: they've basically gone down by fifty percent, so right now
[21:31] Speaker 6: we're under five percent historical lows. And the problem is
[21:35] Speaker 6: that the story is not getting any better. So with
[21:37] Speaker 6: the emergence of Starlink and the possibility of having much
[21:41] Speaker 6: greater competition in the broadband landscape, you know, the story
[21:45] Speaker 6: just gets so much more complicated and muddied for both
[21:49] Speaker 6: Comcasts and Charter.
[21:50] Speaker 3: I'm just looking at that service area. Charter Communications provides
[21:55] Speaker 3: a service across forty one states, including much of New York, California, Texas, Florida,
[22:02] Speaker 3: and I'm taking a look at the STAE now coming
[22:05] Speaker 3: up to nine percent year to date. I mean, is
[22:08] Speaker 3: it a possibility here that Charter Communications either tries to
[22:11] Speaker 3: sell off some parts of the business or just gets
[22:13] Speaker 3: bought out in the next couple of years.
[22:16] Speaker 6: Excellent question, And this is what all of us have
[22:18] Speaker 6: kind of been, you know, scratching our heads with. So
[22:21] Speaker 6: one of the things that came out of the Comcast's
[22:24] Speaker 6: decision to separate out its NBC media business is the
[22:28] Speaker 6: fact that now the remaining business will be a pure
[22:30] Speaker 6: play cable company, a clean cable company, and that kind
[22:33] Speaker 6: of sets the stage for a potential you know, m
[22:35] Speaker 6: and a deal with Charter. So remember there is really
[22:39] Speaker 6: no regional overlap with this. Both Comcasts and Charter will
[22:43] Speaker 6: have that national footprint. And really what investors are banking
[22:46] Speaker 6: on is that a combined company with roughly about eighty
[22:49] Speaker 6: billion dollars in costs, can can really extricate some synergies,
[22:54] Speaker 6: maybe up to about five to six billion dollars, and
[22:56] Speaker 6: they would be then able to compete better against fiber
[22:59] Speaker 6: and fixed wireless, which has really caused us extreme deterioration
[23:03] Speaker 6: in their subscriber trends. That's what everybody's hoping for We'll
[23:06] Speaker 6: see how everything plays out.
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