Amazon to Buy Satellite Operator Globalstar for $90 a Share

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2:36Not so little for the seller here, but we're Amazon. Amazon, which doesn't do a lot of acquisitions, they agreed to acquire satellite operator Globalstar in a roughly$11.6 billion deal to boost its satellite operation. Okay. Michelle Davis, she's got the details. Senior deals reporter for Bloomberg News here. Michelle, what's Amazon up to these days? You know, this deal is all about basically, you know, there's a massive race to dominate space-based connectivity. All the tech giants are trying to do it. SpaceX is obviously the leader. Amazon also has big ambitions to be a leader in satellites.

3:09And this deal is all about spectrum. Global Star has really valuable spectrum, which is think of it as real estate. That's, you know, a scarce asset. Whoever got it first was able to sell it later on. And that's that's how Global Star ended up, you know, being able to sell this to to Amazon. And not only are they getting spectrum with this deal, they're also getting infrastructure on the ground and a massive customer in Apple. Apple's one of Global Star's big customers as part of the deal. Amazon was able to negotiate basically, you know, keeping Apple on board. They'll be using the Apple will be using its services to provide, you know, emergency services.

3:46If you're out hiking and there's no no cell service, you can use satellites to call 911 or, you know, people can find you on find my friends, basically. Is there reason to think that anyone would raise their hand, object to this deal? Would regulators get in the way? It's a good question. We've seen regulators be pretty open to these spectrum deals. I mean, the regulators themselves are the ones who auction off spectrum when it is kind of available in the open market. But in a deal like this where, you know, Global Star was the owner of it, of course, you know, they get to be the ultimate decider of who buys it.

4:20And because Amazon isn't the big leader in this space, you know, it doesn't seem like it'd be an issue, but you never know. I think what's interesting about all of this is while this does kind of help Amazon accelerate its ambitions to be a big leader in satellite, SpaceX still, you know, light years ahead of it, has way more satellites in orbit. Amazon hasn't been able to launch as many as SpaceX. So that will be something else that it has to do. And, Paul, I was just noticing that Global Star CEO is Paul Jacobs, the former CEO of Qualcomm. Ah, very good. OK. So, I mean, Amazon does have this low Earth orbit satellite network, Amazon Leo.

5:02Exactly. But I don't hear much about that. It's not really in use yet. They're still kind of literally getting it off the ground. And they're hoping that by 2028, especially after this deal, they will be able to launch a direct to device service, which is like having a cell phone tower up in space. And it basically means, you know, consumers, companies would be able to get voice text data without having to use a cell tower, but by using their satellites. Paul, you had mentioned that Amazon does not make a lot of big deals. If you go to the B-U-Y-P function on the Bloomberg Terminal, it shows you the buyer profile.

5:42And the biggest deal is that Amazon has made direct M &A. Whole Foods was back in 2017 for$13.6 billion. Global Star, of course, what we're reporting on today. And MGM Holdings, the library, for$10.2 billion. That was back in 2021. Otherwise, Amazon kind of builds it itself. And we'll see how things shake out before it decides whether to be foreign or not. I didn't know this one. Yeah, you could sort by recent and by largest. Cool. So what's Amazon saying as their strategy here? I mean, are they going to invest in this business? Yeah, I mean, what they're really saying is that this, you know, is part of their vision to provide connectivity to people and be a leader on Earth, connecting people, you know, through groceries and deliveries and now, you know, voice, text and data.

6:28And this is separate from Jeff Bezos' own little rocket. Yeah, well, that's why Michelle said on Earth, because at some point it's going to expand to in space as well. Stay with us. More from Bloomberg Intelligence coming up after this. For years, the conversation around Bitcoin was the same. Is it real and does it belong in a portfolio? While others debated, CoinShares got to work. In 2015, they launched the world's first Bitcoin EDP, regulated, listed and built for institutional investors. long before the U.S. market caught up. Today, they manage over$6 billion in assets and have remained profitable through every market cycle, including the 2022 downturn.

7:07What sets them apart? They're not a crypto exchange chasing trading fees, not a company betting its balance sheet on Bitcoin, not a mining operation. CoinShares is an asset manager with recurring fees, a fixed cost base, and a business model you can actually model. Now listed on NASDAQ under ticker CSHR. Learn more at coinsharesipo.com.

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8:54Let's talk about another group that obviously is affected directly by the surge in oil prices, and that is the airline sector. There's a really interesting story today, Paul, about the United CEO pitching President Trump about a possible combination with American. That kind of just struck me as bananas because it would create a behemoth. Yep. And they didn't let smaller airlines get together. I'm not sure why they let these big ones get together. All right. So let's bring in Sid Phillips. He's our chief correspondent for Global Aviation. And Sid, I mean, as Paul pointed out, they didn't let JetBlue and Spirit get together.

9:27Why would someone okay a United American Airlines combination? So, Scarlett, this is obviously a story that we sort of heard from multiple sources. And I think the airlines are looking to test the administration on how willing they would be to approve of deals. I mean, the last administration was pretty clear that they did not see consolidation as sort of beneficial to customers. but they sort of Trump administration's been more business friendly. And so United Airlines has sort of floated this idea to the president in terms of merging with American Airlines. I mean, it would create the largest airline on the planet and it still wouldn't be.

10:08I mean, they still only have a third of the U.S. market share combined. So it's not quite this would sort of dominate the market. I mean, it would because, I mean, they would have all the important routes like Dallas and Chicago, where United and American control a large chunk of the market. But in other places, like we've seen other airlines as well. So it does look like it's unlikely to go through because, I mean, this would be opposed by all the airlines who are not part of it. It would be opposed by consumer rights activists and may also sort of not find favor with the legislators. And so we still have to see how this will go through.

10:45Do we have any feeling from the regulators in the past? Because, again, as Scarlet mentioned, all we kind of know as observers is that they didn't let two little itty bitty airlines get together. How would this happen? So we're still looking on, we're still waiting to see any sort of commentary from it. I mean, the sort of the most direct commentary we've heard was from Sean Duffy, the transportation secretary, when he spoke last week and told CNN, CNBC, that the president likes big deals. And when asked about a specific large merger, he said that they may have to shed assets. And so that's the only thing we've really heard.

11:25But in terms of whether or not this administration will be willing to sign off on such a big deal, that's still to be seen. Okay, so there's a bit of a backstory here in that United CEO Scott Kirby was the one who said that this is something he kind of floated. And he has a history with American Airlines. So it didn't come from out of nowhere. Absolutely. I mean, this is also personal for Scott Kirby because Scott Kirby was previously the president of American Airlines. And he left in 2016 when it became clear that he wasn't going to be CEO of American Airlines. And then he sort of joined United Airlines and he rose to the top job.

11:58And that's really his sort of backstory. And so American and United have been sort of always been one upping each other. I mean, at the most recent is that they've been battling in Chicago over Gates and market share. And then the FAA had to come in and sort of restrict flights because there's too many airlines adding flights in Chicago and the airport can't actually handle those. So what's it mean for I mean, I'm looking at JetBlue. That stock's up 11 percent today. Are people in the industry saying, whoa, whoa, whoa, whoa, people could talk about it united in American. How about everybody else getting together?

12:33Absolutely. I mean, the fact that this deal's out there, it also sort of opens the doors for other combinations. I mean, especially at times of crisis for the airline industry, mergers and acquisitions tend to happen. I mean, we saw that in the aftermath of the 2008 financial crisis. And for the airline industry at the moment, this sort of surge in oil prices is a massive blow because there's only a limit as to how much a consumer will be willing to pay before they sort of say, OK, we'll hold off on travel this summer. And for the airlines, fuel is the biggest sort of single biggest cost aside from staff cost.

13:09And so they have to sort of figure out how they can actually make money on with fuel being where it's at. And that sort of time when typically consolidation happens, where weaker players tend to get snapped up by the more sort of robust financially, financially robust ones. Stay with us. More from Bloomberg Intelligence coming up after this. The news doesn't stop on the weekends. Context changes constantly. And now Bloomberg is the place to stay on top of it all. Hi, I'm David Gura. Join us every Saturday and Sunday for the new Bloomberg This Weekend. I'm Christina Ruffini. We'll bring you the latest headlines, in-depth analysis, and big interviews.

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14:40you're listening to the bloomberg intelligence podcast catch us live weekdays at 10 a.m eastern on apple carplay and android auto with the bloomberg business app listen on demand wherever you get your podcasts or watch us live on youtube i'm not into the ev thing yet i did get one hybrid for the number four offspring and that's who's in california so like that's the context here Yeah,$6 gas. So one of the EV companies I kind of forget about, it's just me, is Lucid Group. They make the trucks. It's because you're not a Timothee Chalamet fan. Oh, is that it? Yeah, he's the global brand ambassador.

15:13All right, the stock's got$2.9 billion valuation down, 16 % this year, down 65 % over the trailing 12 months. But they have some news out today. They're getting a new CEO, and they announced$750 million, a fresh investment from two big backers here. So let's see what's going on with Lucid, ticker LCID is the Bloomberg ticker. Craig Trudeau, Global Autos Editor for Bloomberg News. He joins from London. Craig, what's Lucid doing here to try to turn things around? We knew it was going to be a busy morning for them. It was an even busier morning than we anticipated. We spoke with Silvio Napoli, the former head of Schindler Holding of Elevator and and moving walkway fame.

16:01He's going to take over as CEO. The person who's been filling that seat for over a year now on an interim basis, Mark Winterhoff, he will return to the role of COO. He took over from the CEO who actually took this company public. I think Lucid, in addition to, You mentioned the commitment as well from the Saudi Public Investment Fund and Uber. The other news here was as part of this capital raising, which they're doing some raising beyond just from the PIF and Uber, is releasing some preliminary earnings, which did not look great. So this is a company that has really been struggling to execute, make some really appealing and interesting electric vehicles, but has really struggled to make them in higher volumes and doing so in a profitable or remotely profitable way.

16:57So, you know, I think in short, Napoli has his work cut out for him. I mean, is Lucid's goal to be a mass market EV company? From what I can find, it doesn't deliver a lot of cars. In 2024, for instance, it delivered more than 10 ,000 vehicles. But, I mean, that's nothing compared to something like Tesla. Yeah, it's a fraction. And I do think it's been a case where the company has been sort of feeling around what exactly its play is. I think for a time they were trying to go lower volume, higher prices, and kind of casting themselves as a premium player. But later this year, they will start production of a midsize vehicle where they've flagged the rough pricing of that being around$50 ,000.

17:41So that would put them more, at least closer to the mass market where you see a Model Y, you can get priced in that range. So this is a company that has tried to compete with the Mercedes and the Porsches of the world, found that really difficult. And they are doing a bit of pivoting. How much that has been a sort of change in plan versus the plan all along is a little bit unclear. and is kind of dependent on who you ask. I think the CEO who was replaced about a year ago would have preferred they stayed premium, and I think they've changed tack a little bit under the new regime. So right now, the Lucid's big thing, of course, is this partnership with Uber.

18:27And this was first announced in July where Uber said it would buy at least 20 ,000 Lucid Gravity SUVs, that new vehicle you were talking about. Has this partnership with Uber amounted to anything just yet? I mean, is it getting its name out there? Yeah, I think it's going to be really interesting to see if that is able to get off the ground. They have a third party that's involved in that partnership, a company called Neuro that itself was working on delivery robots and has pivoted to getting into autonomous vehicles and trying to compete with the likes of Waymo. This is still very much in the sort of prototyping and testing phase, and we've not seen them actually launch vehicles.

19:09But I'm endlessly fascinated by just how much money Uber is throwing at trying to kind of, you know, have its own fleet of self-driving vehicles and have, you know, some competition for Waymo, even as it partners with Waymo. There's a lot of experimenting and playing around with business models in the space. and we are still so early for all the headlines we read about new cities that Waymo is entering. They still have just a few thousand cars out on U.S. roads across the various cities where they have deployed. And so this is really, really early innings, even if people are increasingly having their first experiences with getting into a fully driverless car.

19:49Craig, what's the latest with Tesla and its bringing in a lower price model? Yeah, there was an interesting report out of Reuters about maybe they're dipping their toe back into making a vehicle priced below the Model 3 and the Model Y. We saw Tesla China representatives deny that report. But what made that so fascinating is it's speaking of sort of changes in strategy by companies. You know, I think Elon Musk has sort of, you know, mince no words about, in his words, it being stupid for Tesla to sort of bring cars to market that are lower priced, you know, because in his mind, you know, every day is, you know, going to be the day that Tesla sort of flips a switch and is able to render its cars capable of driving themselves.

20:43I think regulators are extremely skeptical of that, in part because, you know, those days keep coming and going without that capability really being ready to where, you know, people behind the wheel can actually tune out and not pay attention to the system that Tesla sells as full self-driving, which just has not lived up to the name yet. Yeah, I mean, there's two components to that, right? The fact that a switch could be flipped on that and whether regulators would allow it technologically, whether we're there yet and whether the regulators have given that the OK. Do consumers want that? And that's a great question, too.

21:20I think, you know, some consumers, absolutely. And, you know, you will see Tesla super fans, many of whom happen to be investors, you know, sharing indications of progress where they are fond of taping their drives where things go well. And yet the questions that you sort of naturally raise are how sort of choosy are they being about what clips they show and don't show. And you still continue to see incidents where Teslas that aren't being supervised are getting into really troubling crashes. it. Stay with us. More from Bloomberg Intelligence coming up after this. You can get the news whenever you want it with Bloomberg News Now.

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22:39When news breaks, we'll have an episode up in your podcast feed within minutes, so you're always getting the latest stories and developments. Get the reporting and the context from Bloomberg's 3 ,000 journalists and analysts. We're all over the world. Listen to the latest from Bloomberg News Now on Apple, Spotify, or anywhere you listen. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. It is earnings season.

23:16The big banks began reporting yesterday with Goldman Sachs kicking things off, which is kind of unusual because it's usually not the first bank to report. That would be J.P. Morgan. J.P. Morgan, Citigroup and Wells Fargo reported today. So four out of six big banks have reported. Herman Chan, of course, is our senior bank analyst here at Bloomberg Intelligence. and of course we needed to bring him in. Is it as simple as to say that the volatility in the markets is just unit directionally good news for these big banks? It is, at least for the ones that reported today. So JP Morgan City posted really strong results on trading equities and on the fixed income side.

23:54I would contrast that a bit with what Goldman did yesterday where they disappointed a bit on the fixed income side of the trading house. That was driven by areas like rates and mortgage, which seemed like they were not positioned correctly with the volatility that happened in March. What's going on with Wells Fargo? Yeah, Wells Fargo. It's an interesting story. They reported really strong earnings from an EPS standpoint, but the disappointment came from the net interest margin. It was down 13 basis points, quarter over quarter. management talked about some areas that were driving that growth in some lower yielding markets businesses that they're intentionally growing due to the fact that they think that will bring along business in other areas like trading in the prime brokerage business.

24:47So it's sort of like build it and they will come type action going on. And they expect some further compression in the second quarter, which is driving some of the weaker market sentiment that we're seeing today. Wells Fargo had its asset cap lifted by the Federal Reserve, which means that it can now get bigger. So do we expect some more spending, some tighter margins for the foreseeable future as it tries to really build on its assets? Yeah. You see the assets growing really quickly. They're probably going to be the fastest growing G-Sib bank that we cover, the largest banks that we cover in terms of loan growth.

25:26That's about 5 % quarter by quarter. But it has to make up a lot of lost ground. It does. It has to make up a lot of lost ground, and they're sort of growing the balance sheet to help offset some of the margin compression that I mentioned earlier. But that also portends a higher cost in areas like advertising and headcount growth potentially over time. But definitely you're seeing it in the advertising spend. Are the banks in general, are they lending money these days? How's the loan origination look? Yeah, they are in pockets, right? So there's not a lot of growth in areas like mortgage because of the rate environments.