Daybreak Weekend: Netflix Earnings, Davos Preview, China Data

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1:28This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight ahead on the program, we'll look to earnings from streaming and chip giants, Netflix and Intel. I'm Nathan Hager in Washington. I'm Caroline Hepker here in London, where we're looking at the annual gathering of the powerful, the rich and the famous in Davos, Switzerland. I'm Doug Krizner looking at how Beijing will report the performance of the Chinese economy. That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 1130 New York, Bloomberg 99.1 Washington, D.C., Bloomberg 92.9 Boston, DAB Digital Radio London, Sirius XM 121, and around the world on BloombergRadio.com and the Bloomberg Business App.

2:20Good day to you. I'm Nathan Hager. Investors will be watching earnings from Intel and Netflix this week for signals on two very different corners of the tech landscape. We'll hear from Netflix first on Tuesday. And for more on what to expect from the streaming giant, I'm joined now by Bloomberg Intelligence Senior Media Analyst Geetha Ranganathan. And Geetha, I feel like there's been so much talk about Netflix's bidding war for Warner Brothers Discovery that it's been kind of easy to lose sight of the fundamentals. So this will be kind of refreshing. What are you expecting? Yeah, I'm really hoping we get a respite from this three ring circus, Nathan.

2:57I mean, it's been going on for quite a while now. I hope the focus really turns. And this is a distraction, you know, from this whole drama that we've seen. But fundamentals wise, you're absolutely right. The company has never been in a stronger situation. We think they will absolutely deliver on their revenue growth expectations of about 17 percent, strong operating margin, strong free cash flow. They're expecting about$9 billion for the full year. And really, I mean, many, many times, Nathan, the company has said that, you know, 2025, as well as the fourth quarter, the slate really is absolutely a blockbuster slate.

3:36I mean, you think about it, Stranger Things, you know, the finale, you had so many other titles. I mean, whether you're thinking about Knives Out or Emily in Paris or, you know, My Secret Santa or Frankenstein, nobody wants this. I mean, the list just goes on and on. But I think more importantly, Nathan, I mean, it was really their sports strategy. So if you look to the Lions-Vikings game on Christmas Day, that was the most streamed NFL game in U.S. history. So really a huge achievement and kind of really speaks to, you know, what Netflix has been able to achieve. So I think there's obviously going to be a lot of attention on all of those metrics, how that kind of plays out into advertising, which is a big focus for them.

4:20But I think still, you know, this overhang from the Warner drama is not going away anytime soon. And full disclosure, I too watch Stranger Things 5 and the Knives Out sequel. But when you think about that content slate and what I would have to think is a strategy for even more content to come into this year, doesn't it raise the question about what the strategy is for Netflix to buy Warner Brothers Discovery? Does it need that Warner Brothers IP? So that has really been the head scratcher, right? People really kind of wondering, is Netflix just playing the long game here? Do they just want to beef up their content portfolio, make more of a defensive play for Warner, keep it out of everybody else's hands?

5:04Or are they really seeing some kind of slowdown in their own core engagement? And I mean, this is what has kind of fueled so much of concern here, because, you know, people really wondering why they're going after the Warner portfolio. Is it because we're seeing, you know, some kind of a slowdown in engagement metrics? I don't necessarily think that will be the case, but regardless of how this whole drama plays out, we know that fundamentals will continue to be very strong. They have their own original titles, even without Warner, have really performed very, very well. We've seen over the past so many years.

5:39But I do think that Netflix is prepping for the future, Nathan, as we kind of look at AI and how AI can democratize content. I think it really becomes key for many of these big streamers to have access to more top tier franchises and properties. And really, Warner brings them a huge treasure trove of titles that they can mine very nicely into the future. Talk a little bit more about what's driving your view that Netflix still has that engagement compared to some of its competitors as well. What are some of the metrics you're looking at now that they don't break out subscriber counts anymore? Yeah, absolutely.

6:16So, you know, they do disclose periodically, you know, a report called What We Watched. And they release this every six months. And we do get some insight into really what are the biggest titles on Netflix, how many minutes are spent watching those titles. And on average, you'll see that a Netflix member spends about two to two and a half hours per day engaging with their content, which is really a staggering number. And then if you just kind of put that in the context of all of the streaming players, they They're way ahead of most of their rivals, but they constantly bring up this comparison with YouTube, whom they actually trail.

6:54And so their whole argument has been, you know, we really need to catch up to YouTube. And that threat only gets bigger, I think, with, you know, the advent of AI and people like wanting to create more content, more user generated content with all of these AI tools like Sora. And so while Netflix really is in a strong and, you know, an enviable position, they always kind of have to watch over their shoulder, I would say. So given that position, should subscribers be on the lookout for things like higher rates? We keep seeing those creep up here and there as well. Yes, they definitely have pricing power.

7:34We've kind of seen a steady cadence of price increases every 12 to 18 months. So I absolutely think that a price increase is on the books sometime in 2026. And that's just kind of become the name of the game here in streaming. We've seen all of these streaming services, I mean, whether it's Netflix, Disney +, HBO Max, all of them really kind of using that pricing lever as the subscriber number is not important anymore. And it's really more ARPU and pricing power and revenue growth. So all of the streamers are kind of flexing their muscle when it comes to pricing. All right. Well, we're going to be focused on the fundamentals in just the next few days when Netflix opens those fourth quarter books.

8:15Thank you for this, Geetha. Great having you on with us. That's Geetha Ranganathan, Senior U.S. Media Analyst for Bloomberg Intelligence. Now let's turn to Intel. The biggest maker of personal computer processors opens its fourth quarter books on Thursday. Is the turnaround intact? Let's bring in Bloomberg technology reporter Ian King for insights on that. Ian, we know the U.S. government is working on building a 10 % stake in Intel, so it's sure to be watching these earnings. What should we expect from the chipmaker? Yeah, I mean, this company has very much had a transitional point. Last year, you mentioned, obviously, the government investment.

8:52There was also an investment by NVIDIA and also an investment by SoftBank. What those did was really shore up the balance sheet. So on that side of the house kind of task completed, things are better than they were. There's no kind of existential risk, at least in people's minds for the time being. But what we're really looking at now is the operational side. You're a chip company. You have to sell more chips. You have to sell more chips that cost more money and get more profit. To that point, where do things stand for Intel right now? getting that operational side in a turnaround in the short term?

9:30Yeah, I mean, we're in the very early stages of that. At the beginning of this year, Intel was at the CES conference in Las Vegas, and they unveiled a new range of chips based on a new production technology. And what they said was, look, this gets us back in the game. This makes us competitive again. And this is very much the proof point that our technology is relevant in this industry. Again, obviously, we're only a couple of weeks away from that. So, you know, too early to see whether they're selling like hotcakes or whether, you know, that's hype from the company. But obviously, the company's forecast this quarter will be really important as a guide to their confidence in that.

10:10Talk a little bit more about what the CEO had to say about those new chips and how they stack up to some of the competition around, you know, names that we're familiar with, like NVIDIA, like AMD. Yeah, I mean, we're talking about PC processors at this point. So that's a high volume market for Intel. So that's important in terms of cash flows. That's important in terms of filling those factories. But it's not the sort of den of profitability, you know, the core profitability. That'll come later when we see what it's doing in server chips. What the company has said is, look, hey, this new range really kind of repairs the issues of the last couple of ranges of chips that we've had out there.

10:52You know, it's the most power efficient and they're good at performance as well. So that really helps position as well against our competitors. And, you know, they're talking about their confidence again. And that's really been the first time in a long time that we've seen Intel really kind of beat their fist against their chest and say, hey, look at our chips. Do those chips, the cost of putting them together, Does that pose a potential risk for Intel going forward? Well, the risk is how many they can sell. They've already built a brand new factory, Fab 52 in Arizona. They're trying to convert some of their other production lines over to this new production technique.

11:33That shift and that cost makes sense if you sell a lot of these things. If you don't, then that's where the problem is. There's got to be a lot of focus as well, like you mentioned, about the foundry plans for Intel, given the U.S. government's focus on boosting that business with its stake? What kind of color could we expect around Intel's factory plans boosting manufacturing in the United States? If you own Intel stock, and as taxpayers in the U.S., we do. All you care about is Intel going out on stage somewhere or in some forum and saying, hey, this is a big customer we have other than ourselves you know nvidia is going to use our plants amd is going to use our plants that has not happened yet and you know the the prospects for that at the moment are kind of murky we don't know it's difficult for intel to sort of do that because you don't want to be talking about what your customers are up to um but frankly the the 18a node the one that these new chips are built on that node has not delivered on the promises of external customers that we got from previous management.

12:40And it might be that the next node, this so-called 14A, which is going to come in the next couple of years, that might be the one where we start to see external customers. So probably a longer term story there. Are you seeing, just reading the tea leaves, much interest, at least in the short term, from potential customers for Intel in some of these chips and the foundry business? If you're one of those companies I just mentioned, you're going to look at intel of course you are we're in a world where we're short of capacity where tsmc is basically filling all of the orders it possibly can and is likely getting more than than it can fill so of course you're going to look at intel but you're also going to look at samsung samsung is a is arguably a more established kind of second source to tsmc in the so-called foundry world so yeah everybody's going to look but intel has to prove that this technology it has is a good enough to compete with TSMC and big offers an advantage because it costs money to switch over as well.

13:40Appreciate this, Ian. Thanks for coming on with us ahead of Intel's earnings. That's Ian King, technology reporter for Bloomberg News. And coming up on Bloomberg Daybreak Weekend, we'll look ahead to the annual gathering of the rich, famous, and powerful in Davos. I'm Nathan Hager, and this is Bloomberg.

14:06Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. Bond markets are massive, murky, and let's be real, lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients. We're talking top-grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com slash audio.

14:48That's vanguard.com slash audio. All investing is subject to risk, Vanguard Marketing Corporation Distributor. Hello, I'm Stephen Carroll. I'm in Brussels, where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now.

15:22And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break So whether it's geopolitics, energy, tech or markets you're hearing it while it happens It's smart, calm and to the point And it fits into your morning You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris On Apple, Spotify, YouTube or wherever you get your podcasts

15:56This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Nathan Hager in Washington. Up later in the program, we'll turn to China and look at whether economic expansion there met the government's target. But first, the international business elite descend on Switzerland next week for the World Economic Forum in Davos. The annual gathering is traditionally about multilateral goals, promoting peace, prosperity and social progress. But this year has begun with fundamental questions about international law, America's role in the global order, and if global business is on the same page on issues like diversity, climate change and politics.

16:33For more, let's head to London and check in with Bloomberg Daybreak Europe anchor Caroline Hepker. Nathan, the organization that runs Davos has set its theme for this year as a spirit of dialogue with world leaders, including US President Donald Trump set to attend, we're quite curious to know what conversations they will be having. It's Trump's first in-person appearance at Davos in six years. Last year, in a virtual address, the US president criticised the Paris Climate Accord and promised to unlock the liquid gold of fossil fuels. As well as his geopolitical interventions in the Middle East, Venezuela and Greenland, Trump has also shown his administration is prompt to impose its demands on global businesses, from reshoring to pricing, executive pay and shareholder dividends across a wide array of sectors.

17:28What message will he, world leaders and the leading light of global business be bringing to this international forum? Joining me now is our editor-at-large, Francine Lacroix, who will be leading Bloomberg's coverage at Davos. as every year, Francine, of course. What do you think are the big questions that you're going to be asking this year at Davos? Not asking you to reveal your trade secrets, but give us an insight. I mean, there's this idea, Caroline, that 2025 was really the year where President Trump shaped his agenda about how he sees the world, economic ties, trade. And I think we're trying to find out whether 2026 is maybe the year where countries or companies push back.

18:10Now, we definitely started the first couple of weeks of this year with a terrific news flow, much, much news flow that we weren't expecting. And look, it's going to be part of the Donald Trump show. He shows up in Davos. It's the third time that he arrives. We believe that he'll be there towards the middle of the week. In his first appearance in 2019, I remember it like it was yesterday, he delivered a surprisingly opened armed message declaring that America first does not mean America alone. Then he was pretty defiant in 2020 as his impeachment trial was getting underway in Washington. And then last year, this was like two days after he got inaugurated, shortly after being reelected, he delivered a speech at the annual meeting via video.

18:55And there he focused on oil prices, interest rates and European regulations. So a lot of the questions will really be trying to figure out how to deal with the president of the U.S., how to deal with the administration, if there's tariffs and trade. And then there's more like the softball questions, you know, about the spirit of dialogue. How can we invest in people? Some of the conferences were probably or some of the panels were probably distilled just to make sure that they would appeal to the Trump administration. But you have great speakers. You have Jamie Dimon. You have all of Wall Street showing up.

19:28But it's a little bit of a mix and match. I mean, you want to know what President Trump does and what AI becomes in terms of valuation and impact on the economy. Interesting. So then who are you hoping most to speak to, to hear from? Because it really is. It's everyone. It's those global world leaders, business leaders who are all going to be there. So I think this year is a little bit different again, because it'll be really interesting to hear a reaction, right? To see if there's anyone that speaks up against some of the things that the Trump administration are putting in place. We'll have good conversations on inflation.

20:04And I keep on getting reminded that why inflation hasn't really taken off is because when President Trump on Liberation Day last year put these tariffs, the rest of the world stayed quiet. This year could be different. I don't know whether Davos is the right time. We also really want to know what is and will be in President Trump's speech. Does he go after Europe? We know that he's been talking about financials and the fact that, for example, he wants to go after some of the private equity because domestically he has this huge, huge concern about affordability. So does that spill over into the messaging for the rest of the world?

20:42I mean, I can remember, Caroline, maybe two, three big policy speeches this year when, you know, it wasn't even the president. It was the vice presidents and people around him came to Europe. And frankly, it was shocking, right? We had J.D. Vance and the people in the room were wondering whether it was still an ally or not, whether the U.S. was. And so I'm looking for tone. And then on the back of that, you know, what some of the big titans think that means for their business and world economy. WEF, which is the organization obviously behind Davos, in their mission statement, had to thumb through the book to find it.

21:17improving the state of the world. That is part of their mission statement. The emphasis being on dialogue, on collaboration, on cooperation. And as you very much alluded to, President Trump being there, in many ways, the kind of aggressive expansionist America First policies are really a kind of direct, indirect conflict with that aim. So could it get uncomfortable? It probably will get uncomfortable at times unless everybody plays ball and tries to say that they get along. The WEF mission statement is always a little bit complicated because they try and invite big head of state. That can be controversial.

21:56There was a Chinese president a couple of years ago. We've had other presidents that were, they had to make sure that they felt welcome at the same time not being seen as a pushover. But I think what the World Economic Forum is is a great platform for, again, companies or heads of state to try and push their message. So we're expecting, for example, the UK prime minister with the chancellor to try and push the UK and saying, look, you know, this is what we're planning to do on growth, maybe to put the direction in a better footing for the UK after some of the mishaps that we saw in the budget and non-DOMs.

22:35So it is a platform where you speak to worldwide investors, where it gets picked up. But a lot of the business goes outside of the World Economics Forum remit, right? It's not in the Congress Centre. So I guess what we'll see in the Congress Centre, apart from these big policy speeches, may be a little bit softer. And then we're also expecting deals outside. It's quite a circus. Yes. With a lot of snow this year. And, of course, with Bloomberg Davos House, you know, with lots of speakers who actually come and talk to you and all of our other reporters there. Stock markets also are at a high, So, I mean, it comes at a very interesting moment.

23:15European stocks have done incredibly well. Lots of focus on defence stocks as well. Geopolitical risks are very high. Stock markets are very high. So it's kind of quite an interesting moment, isn't it? Yeah, I'm excited about Bloomberg House because we have a lot of the AI tech giants. And so if you look at AI, I think there are three main questions which we'll try to address. This is first, you know, if you look at AGI, Artificial General Intelligence, how far away are we from it? How do you actually define it? Because it changes depending on who you are. There's, of course, the question about valuations.

23:51So if you're a Google or an open AI, we'll speak to actually a Dario Mudeo of open AI. I mean, the valuations of these companies, the IPO, they're just massive. And so there's a real question on this is all on expectations. But when do they actually start making money? When do they start showing in revenue? And then the other question, which I think really filters through the economy, which we haven't spent that much time on, is we're hearing the labor markets are fine. But I hear more and more chief executives saying, look, I'm going to hire a little bit less because I have to spend on AI and AI gives me the promise of productivity.

24:31So actually trying to understand what this means, you know, in six months, 10 months, but even then two, three years for our economies and job displacements is something that we'd like to put the focus on. Yeah, interesting, isn't it? Is that big debate about globalization? Is this a change, the end of globalization? Does trade flows continue versus, as you say, that maybe domestic productivity push and gain from AI? I mean, in the past, again, you slightly alluded to it, but climate change and green finance have featured very heavily at Davos. Do you think that still holds? I can't see anything green on their green financing.

25:11There's a little bit on renewable energy, which is under the umbrella of the energy complex. I think there are still quite a lot of panels outside the World Economic Forum. Now, there are, of course, rumors that this is because the Trump administration said, look, we don't want anything really woke on the agenda if we show up. Again, if you look at an energy panel, it's difficult to do an energy panel without touching on renewables and green and how you finance that. But it's really not as prominent as it used to be. I think a lot of those conversations will still be happening, but maybe outside.

25:46Again, there are a lot of houses. There's also a USA house. There's a lot of houses just outside the Congress Centre, which people are taking over. And that comes up more outside the Congress Centre than inside where it's managed by the World Economic Forum. Fran, I'm not going to ask you how many years you've covered Davos. I know it's a long time and that it's very important because it anchors a lot of our thinking, doesn't it? Because it comes right at the start of the year. But I do want to ask you what I think listeners will be interested in, which is how do you have the stamina? to go from conversation to conversation to conversation with all of these people on very different topics?