Trump’s Warner Bros. Meddling Pushes Limits of Executive Power

22:35I'm seeing a wait and see. And that's, again, that's a backdrop where if we see, and I do expect that we will, the benefits of the one big beautiful bill act for both businesses and consumers pulling us out of this soft patch in the first half, that's probably not a super negative labor market backdrop.

22:53Carol Massar:But is it inflationary? I think so. I think so. How badly or is it manageable? Does it mess up the Fed and its strategy here? So my, based on what I heard yesterday, I think our base case is actually pretty aligned with the Feds, which is so boring. You love to have real fights. You're in good company, though. But I think, you know, look, inflation's gone nowhere this year. We've been sitting around 3 % for 12 months. And the answer to your question is I don't actually expect the inflationary backdrop to be incredibly problematic. But we saw these sort of shadow dissents yesterday that are suggesting, look, if things go pretty well next year, that is a potential staying where we are, or maybe even seeing a hike by the end of next year for the Fed.

23:34That's a good economy. That's a reasonable backdrop. Right. It's responsible. It's responsible. Like in terms of what the Fed

23:43Carol Massar:or certain members of the Fed being concerned, right? Exactly. Now, if you look at, and we did a deep dive on this, gosh, I guess a year ago, but if you look at the instances of real double peaks in inflation in U.S. history. And we have a couple ones after World War Two, ones in the 70s, 80s. There are some ingredients that they have and all of them are possible in 2026. So one of the ingredients you have is you have sort of just got about 30, 35 seconds, double dip in goods and labor supply, demand and balance. Tariffs could be providing that for inflation. We don't know. You have a super accommodative fiscal policy and artificially low Fed funds rate.

24:21Those are not worrisome conditions right now, but that's an outside risk, but the conditions are there.

24:29Carol Massar:This is fun. It's great to see you. Good to see you. If we don't see you before the end of the year, happy new year. And we will certainly see you in the new year. Lauren Goodwin, economist and chief market strategist at New York Life Investments, joining us right here in studio. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

24:50Carol Massar:you're listening to the bloomberg business week daily podcast catch us live weekday afternoons from 2 to 5 eastern listen on apple carplay and android auto with the bloomberg business app or watch us live on youtube more than four years ago you might remember i didn't know this i love the way this story said yeah yeah so more than four years after warren buffett let slip I didn't know this was a slip that Greg Abel would be succeeding him. The accountant turned energy executive is finally taking the reins of Berkshire Hathaway. It's the one trillion dollar conglomerate with businesses that span insurance, freight and retail and employs close to 400 ,000 people.

25:28Carol Massar:And I think it was Charlie Munger who actually let it slip. And I think, you know, their annual meeting. Well, they're together usually at this annual meeting. They're a tag team, if you will. Great catch, Carol. Yeah. And just saying what Greg will keep the culture. And it was like, so it kind of like set things in motion. So that culture also includes$382 billion. It's a war chest. That's enough to come to the rescue of some of America's largest companies with a single check. We've got a great round table on really the future of Berkshire Hathaway. Let's get to it. Kathy Seifert's with us, Senior Vice President, Equity Analyst at CFRA Research and Bloomberg News Finance Team Leader here at Bloomberg.

26:10Carol Massar:Let me say that again. Kat Chiklinski. She's here in studio, staying with us, and we continue our conversation. So good to have both of you with us. Kat, I want to start with you. You know, here at Bloomberg, you've covered Berkshire for a long time, as has Kathy. But it's the end of an era. It's a real change. And they've been very smart in terms of grooming folks to take over. But nonetheless, it's a massive change for a company so identified with Warren Buffett. And Charlie Munger. Yeah. And it's it's tough. It's big shoes for Greg Abel to fill. And I think, you know, obviously shareholders know him pretty well.

26:48He's been speaking at the annual meeting. He's led the energy business for years, but it's different. And and I think it's really going to be the end of an era. And we're going to we've already started to see a little bit of signs of what's taking shape there. What do you mean? Well, this week, actually. So we saw Todd Combs left Berkshire. He's one of the top stock pickers. He's going to JP Morgan. We also saw they installed a new general counsel, which rare for a modern company these days not to have a big sort of general counsel. But they didn't have one. They didn't have one. They relied on actually Munger, Tolles & Olson for so many years, that law firm.

27:23So, you know, we've already seen these changes that like, I think Greg in some ways is going to start to run it like a little bit more like a sort of normal modern company. And you're seeing it take shape already.

27:36Carol Massar:Kathy, how long have you covered Berkshire? Oh, gosh, do you really want me to do that math? And actually, Kat and I used to talk pretty regularly. I've covered Berkshire for more than 30 years. So I, yeah. And the interesting thing, now that you've put my tenure on the table, is that up until now, very little changed. You know, it was truly, it was business as usual. And I think now we're on the cusp of potentially some significant changes. I think some are good. I mean, you know, Kat, you mentioned that they're bringing in a general counsel, which is, you know, kind of striking that they didn't have one before.

28:19I think the other thing, and this is a little selfish on my part, they don't have an investor relations function. So as an analyst, it's very difficult to get a really good sense of what management is thinking. The only time you hear from management, and it's not even the full team, is at the annual meeting. And so when this announcement of Warren's retirement was made and they were talking about business as usual, I think there were some of us who follow Berkshire who were kind of hoping it wasn't 100 percent business as usual. You know, Kathy, it's funny that you say that we only hear from management at the annual meeting because Carol and I have actually spoken to some of the portfolio companies of Berkshire Hathaway and they kind of say the same thing.

29:08It's really, really hands off. At least that's how their experience has been. That seems to work, though. I think one of the management changes that may give us a little bit of a glimmer that Greg may have a little bit more of a buttoned up approach is that prior to this, you had Warren and then you had the two vice chairmen. You had Greg, who was in charge of all the non-insurance operations, which is a pretty far flung portfolio. And then Ajit Jain in charge of insurance. And now Greg has elevated the former NetJets head to cover sort of the retail and consumer side of the non-insurance business.

29:55Greg is going to retain kind of the energy and industrial portfolio. And then, of course, you have insurance. It's still a very far-flung enterprise. And I think an argument can be made to perhaps not have as decentralized a management style. Take a look at all of the holdings and see if maybe there are some economies of scale to be had from maybe consolidating some of these names. I mean, I wouldn't be surprised if some of that takes place. But I think we also need to discuss kind of the disappointing part of this transition, and that is Todd Combs' departure. And that, for me, was kind of the biggest deal in all of this.

30:47Carol Massar:We want to come back to you. I agree with you. When that hit, I was like, wait, what's going on? And I was also Srinatharajan here at Bloomberg News, and I'm like, wait, is this Jamie maybe thinking about somebody else as a successor? certain. He looked at me like I was kind of cuckoo, but I just thought that was such a big move. Kat, remind everybody, and we'll go back to you, Kathy, in a moment, who Todd Combs was at this company. Yeah. So obviously they have a massive stock portfolio, more than 200, I think 80 billion at this point. And there were beyond Warren Buffett, who controlled a lot of the stocks, there was actually two stock pickers, Ted Weschler and Todd Combs.

31:23So by having Todd Combs exit and go to JP Morgan, they lost a huge amount of their sort of equity picking prowess. And I think it's a big move. I mean, I think it means, you know, there's a lot now on Ted to be able to sort of allocate that money. And it's hard these days, you know, it's a lot of money to allocate a lot of money. It's so much easier when you're controlling millions, not billions. And you're actually trying to enter stocks. You know, they can't even enter stocks that easily without like affecting the share price. And so they have to be very careful there. So I think this is a huge change at the company.

31:55I'll be very curious to see, like, do they try and get someone else to replace him? Yeah, I was going to say, do they bring somebody else in to take Todd's place? Yeah, I think there's no clarity there yet.

32:04Carol Massar:Kathy, what do you think? Do they bring somebody else in? Well, so this is the other, you know, there's a couple of other little pieces on the chessboard that we should probably talk about. The other role that Todd played and, you know, in the near term was even more critical was he was the head of Geico. And, you know, the insurance business is not a very sexy business, but it's a real integral part of Berkshire's operations. The industry itself is at a little bit of an inflection point. Ajit Jain is in his mid-70s. So Todd leaving not only impacts the investment portfolio, but also some of the operating managerial talent at Geico.

32:45And that, you know, that's a big deal. But it also brings up the point of, I think there are two other sort of drop a pin in these two topics and see what happens. And that is, does Ted Wexler stick around? He is the remaining of the Ted and Todd that that Kat referenced when they brought in some investment help. Ted is still there. Does he stick around, number one? And number two, does Ajit Jain, who's in his mid-70s, does he stick around? And then what happens? So, you know, I think there are, obviously, there's what we know right now, but there's a few other, I think, areas of potential uncertainty and weakness that I think the investment community certainly has on their mind at this point.

33:37So, Kat, the big question that everybody has is how the investments change. And, you know, there was a lot of questions about, OK, well, what is Warren Buffett's interest in technology? And that question, I think, was answered with an Apple investment many at this point many years ago. But it was seen as this sort of turning point. And the company still performed incredibly well, despite the fact that it hasn't made a lot of investments in high-flying tech companies that have performed so well over the last decade. Does that change? It's possible to see it change. Well, I mean, they were late to the Apple game.

34:10Sorry, I just want Kat to jump in and then Kathy will come to you. Oh, sorry. Too many similar names. But I was going to say, yeah, I mean, I think it's, you know, I think the technology, they were a little bit late on it, but they made a lot of money on Apple. And like, I do think, you know, there's a chance you could see it change. You know, I think based on what we've learned from Ted and Todd and now just Ted, you know, like I think some of his investments echo Buffett's, at least in the philosophy of like, they want to see strong, you know, economic moats. They want to see like, they want to see that the company really has some is undervalued in ways like that.

34:45They really think it could increase over the years to come. So like, and buy and hold stuff, you know, I think a lot of their main strategies will, will remain, but whether that means they'll still venture a little more into tech or not, I think remains to be seen.

34:58Carol Massar:Kathy, just got about 30, 40 seconds. One thing I think about is Warren Buffett, they're so identified with the company. They're there for a long time. They're through crises. He, like Jamie Dimon, there's a couple of voices out there that we all turn to in moments, in tough times. And even when performance is off a little bit, we trust because the record is long, wide, deep, and really successful. Do we give Greg Abel the same kind of luxury or does he have to prove himself pretty quickly? Well, I think your answer is in the year-to-date performance of the stock, because I think the shares have been under pressure because the Buffett premium is sort of coming out of Berkshire Hathaway shares.

35:42And I think the investment community has a lot of respect for Greg Abel, but I think he also has enormous shoes to fill. So, you know, I think right now it's very much wait and see. And yeah, people are people are being cautious.

36:00Carol Massar:Well, we'll be all over it. This was really fun. So appreciate it. The question is, do they get a new website? I hope not. Just go there and you'll understand why we said that. Kathy Seifert, Senior VP, Equity Analyst at CFRA Research and our own Katja Golinski, Finance Team Leader at Bloomberg News. This is Bloomberg. Stay with us. more from Bloomberg Business Week Daily coming up after this.

36:47where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM.

36:54Carol Massar:You need to make a huge presentation in an hour. Adobe Acrobat uses AI to take all your documents and generate a presentation with a single click. Build slides quickly and streamline the process. Need a last-minute pitch deck? Do that with Acrobat. Need to level up your presentation design? Do that with Acrobat. You have 30 plus documents that need to be simplified into a proposal. Do that. Do that. Do that with Acrobat. Learn more at adobe.com slash do that with Acrobat.

37:30With Bali from iShares, you get access to both monthly income and growth potential in one simple ETF. It's the best of both worlds. Discover Bali, iShares large cap premium income active ETF. iShares, the market is yours. Visit www.iShares.com to view perspectives for investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Risks include principal loss and the use of derivatives, which could increase risks and volatility. Monthly income is not guaranteed. Prepared by BlackRock Investments, LLC. Support for the show comes from Public.

37:58Public is an investing platform that offers access to stocks, options, bonds, and crypto. And they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R &D spend, small cap stocks with improving operating margins, or the S &P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on Public, you just type in a prompt and their AI screens thousands of stocks and build a one-of-a-kind index.

38:36You can even backtest it against the S &P 500. Then you can invest in a few clicks. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market.

39:00Sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures at public.com slash disclosures.

39:09Carol Massar:You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Broadcom's out, so I want to pull these numbers up. Carol, you have them in front of you, right? Yeah, real quickly, let's go to the Outlook. C's first quarter revenue, about$19.1 billion. The estimate on the street is$18.48 billion. That's big. Yeah. Let's go to the past quarter, fourth quarter, adjusted net revenue. That was a beat,$18.02 billion versus a street estimate of$17.47 billion.

39:48Carol Massar:Let me go a little bit more to the outlook. C's first quarter revenue, we already mentioned that one, and that one is a beat. We're seeing that stock up almost 7 % in the aftermarket. Fourth quarter semiconductor solutions revenue,$11.07 billion. The estimate on the street,$10.74 billion. And fourth quarter adjusted EPS, Tim,$1.95 a share. And that is compared to a street estimate of$1.87. So that one's about eight cents better than what the street was expecting. Yeah, shares of about 3.8%, up 4 % in the after hours as we speak. Fourth quarter adjusted earnings per share for Broadcom beating estimates.

40:26Adjusted EPS coming in at$1.95, this for the fourth quarter, just a net revenue coming in above estimates at$18.02 billion. And Carol, you were also talking about the outlook, which beat estimates. That came in significantly above estimates. First quarter revenue, about$19.1 billion, beating estimates of$18.48 billion.

40:46Carol Massar:Yeah, and my apologies. I was looking at Lulu, which was up like 6%, 7 % in the aftermarket. As Tim mentioned, it's now up Broadcom about 3 % or 4 % here in the aftermarket. And it also looks like Broadcom is increasing its quarterly dividend, regular quarterly cash dividend to 65 cents a share from the previous dividend of 59 cents per share. So that's what we were projecting here at Bloomberg. So let's bring back Jay Goldberg. He's had 30 seconds to look at these numbers. He's senior analyst for semiconductors and electronics with Seaport Research Partners. A beat across the board, Jay. Anything in here not to like?

41:20So far, so good. Right. It's a good number. It's not a crazy big blowout, but it's good. You know, on first blush, everything looks fine. You know, I'm content so far. We'll see what they say on the call.

41:34Carol Massar:Looking at commentary here off of the press release, quote, we see the momentum continuing in the first quarter and expect AI semiconductor revenue to double year over year to$8.2 billion driven by custom AI accelerators and Ethernet AI switches. So the question, Jay, I was going to ask you before those numbers came out, and it's probably even a more pertinent question now, is the connection between Broadcom's earnings and what we see in terms of CapEx from companies like Oracle yesterday. Can you make the connection for us? Yeah. So I think there's a big distinction here in that a lot of what is going on with NVIDIA is sales to neoclouds, sort of cloud service providers other than the big three.

42:19Yeah, like you're talking about like CoreWeave, for example. Like CoreWeave and Nebius, right? And to some degree, OpenAI. And so there's a growing amount of concern about the ability of those companies to finance their build-out. By comparison, most of Broadcom's customers are very well capitalized. They're big companies who you can afford to design your own chip. You can afford to pay the bill to actually see the project through to completion. The one big exception to all this, of course, is OpenAI. And like they have deals with NVIDIA and deals with Broadcom to do their own chip. So that's a little bit of a question.

42:54But certainly there's less of a financing concern tied to Broadcom's numbers than there is to some of the things that are going on with NVIDIA.

43:01Carol Massar:Hey, that number that they expect AI semiconductor revenue to double year over year to$8.2 billion, that's impressive. It's a big number. They've talked about that before. Okay. So that's not a surprise, but it's, you know, they're reiterating that guidance. and I'll tell you one thing that's been interesting this quarter in particular is press releases only tell part of the story. There's been a lot of sort of big after-hour swings in some of my names this quarter based on commentary during the call so I'm kind of curious Hawk Tan, the CEO of Broadcom is known for having all kinds of interesting color and saying really interesting colorful things and so I wouldn't be surprised if he has a few more surprises on the call itself Like what do you mean?

43:47Like, when he's bullish, he can be very bullish. We saw that last quarter with them and the quarter before. You know, back a year ago, nobody thought Broadcom had an AI story. And he started talking about it on the call. And suddenly people realized that not only do they have an AI story, but it's a massive story. The stock was up 20 % that day. And so they're continuing to build on that. And he can, you know, he's very talkative. I mean, what's remarkable about that is if we look at the one year chart, I mentioned, you know, up 75 % so far this year. Carol, it's up 127 % from a year ago.

44:22Carol Massar:Yeah, that's right. Like, it's unbelievable. Let's just, in case you're just joining us, shares of Broadcom are up about 2.7 % here in the aftermarket, off their highs because they've been a little bit higher coming off of earnings. The big reason that investors are excited here in the aftermarket has to do with the outlook for top-line growth. We're talking about Broadcom saying it sees first quarter revenue, about$19.1 billion versus an estimate on the street of$18.48 billion. They also expect AI semiconductor revenue to double year over year to$8.2 billion. We've been talking with Jay Goldberg over at Seaport Research who said that number has been out there before, but they're reiterating them, so doubling down, if you will.

45:04Carol Massar:And the fourth quarter, looking backwards, net revenue, that was a beat. Fourth quarter adjusted EPS, that was a beat. The company also saying it sees momentum continuing in the first quarter, and then it raised its dividend by that 10 % from the prior quarter to$0.65 a share. Top of mind then, Jay, what's your top question here? Or do you just want to let Hawk 10 go and see where he goes? Yeah, one-on-one, I would just let him go and see where he takes us. I think the main things I'm looking out for are, what's he going to say about other customers beyond the ones that they've announced? What's the timing of some of these ramps for these new products?

45:42And what he's of the future, if they're going to gain some more customers. I think that's all sort of, he said they have a certain number of customers lined up for this, but there's also been a lot of chatter this quarter that they may have won somebody else like a Microsoft. And so I want to see if he takes the bait and talks about that topic. You know, I'm looking at that Hawk Tan and he's in his mid-70s right now, early 70s. Yeah. Do we have questions about succession? so last quarter he actually said the board had extended his contract through 2030 and he'd accepted okay he he has been instrumental in making this company what it is he's taking it from almost nothing to to what it is massive company today uh and so there there was a little bit of an overhang like i think people thought he was going to retire next year but he's clearly i don't think he's doing it for the money i think he's just having too much fun and he's gonna he's gonna stay with it until 2030 hey jay ardina bass out with us short

46:40Carol Massar:right through off of Broadcom and their results. And, you know, she notes that much of the recent buzz around Broadcom stemmed from its ties to some of the biggest AI model providers. And we've been talking about this with you. ChatGPT maker OpenAI signed a pact with Broadcom for its own AI chip designs, while Anthropic agreed to use tens of billions of dollars worth of computing services based on Alphabet's Google Cloud TPUs. The latter components also rely on Broadcom Designs, helping fuel investor enthusiasm about the chipmaker's AI prospects. We've been talking all about this. Do you want to see Broadcom broaden out or, man, they're playing with, you know, the bells of the ball, if you will.

47:19Carol Massar:And so they're in a good position. I think there's a little bit more broadening they can do. There's a few more customers they can pick up. But the Broadcom model for his entire tenure has been focus on the sort of the biggest customers and just service them extensively, right? So, you know, when they're a big player in wireless chips, and so they're, you know, their main customer is Apple, and they've been there for Apple for the entire run of the iPhone. And Apple's, like, if you're not Apple, it's hard to get much attention from Broadcom. I think they're going to replicate that model here, and it's worked so far.

47:53And I think, again, add a couple, add a Microsoft maybe, maybe add an Apple if they ever get into this, but, you know, they don't have to add 100 more customers. They don't have to add 10. Two or three already is driving the numbers pretty significantly. All right, Jay. We always love it when you hang out with us. Thanks for taking the time, especially on such a busy day. Jay Goldberg, Senior Analyst, Semiconductors, and Electronics with Seaport Research Partners. This is the Bloomberg Business Week Daily Podcast. Available

48:21Carol Massar:on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

48:48Carol Massar:Do you ever feel like you're drinking from a firehouse? PayCore's intelligent HR solution empowers leaders to turn down the pressure. Their unified platform includes payroll, talent management, compliance software, and a lot more, connecting you to the people, data, and expertise you need to drive long-term business results. Visit paycor.com slash leaders and go from work flood to workflow. That's paycor.com slash leaders. From coast to coast, unlock adventure at Red Lion Hotels by Sinesta, where restful sleep, friendly service and local knowledge await. Whether for business or pleasure, spend less and make more of every trip.

49:30When you sign up for Sinesta Travel Pass, you'll get our best rates instantly. Go to Sinesta.com to book your stay and unlock our best rates with Sinesta Travel Pass. Here today, roam tomorrow. Join now at Sinesta.com. Terms and conditions apply. Shake it up with Vital Proteins Collagen and Protein Shake. It's a high-quality, ready-to-drink shake with 30 grams of protein and 10 grams of collagen to support healthy hair, skin, nails, bones, and joints. With zero grams of added sugar, no artificial sweeteners, and absolutely no carrageenan, it's a clean, delicious way to fuel your day. So you don't just age gracefully, you age powerfully.

50:13Vital Proteins. Stay vital. Learn more at vitalproteins.com.

50:22With Bali from iShares, you get access to both monthly income and growth potential in one simple ETF. It's the best of both worlds. Discover Bali, iShares large cap premium income active ETF. iShares, the market is yours. Visit www.iShares.com to view perspectives for investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Risks include principal loss and the use of derivatives, which could increase risks and volatility. Monthly income is not guaranteed. Prepare by BlackRock Investments, LLC.