AT&T Reports Greater-than-Expected Mobile Subscriber Gains

0:00So, like 100 % of investors think that protection is important, but only about 70 % of advisors are like talking to their clients about that.

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1:45Scarlet Fu:Bloomberg Audio Studios. Podcasts. Radio. News. 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. Staying with earnings, AT &T adding more wireless subscribers in forecast by roughly 100 ,000 customers. The CEO, John Stanky, joined Bloomberg Surveillance to discuss the rise in subscribers. Take a listen. We can provide world-class networks in both wireless and fixed that tackle 98 % of what a customer needs to do on the internet.

2:30Occasionally, they walk off one of our networks, And as you look at our partnerships that we're working with the satellite industry, by this time next year, we'll be able to solve that problem. And so we're the natural place for people to come and meet their needs on the Internet and do it easily on one bill with one set of services and one support infrastructure. We think we're in a great position as a result of that.

2:52Scarlet Fu:Kelsey Griffiths is the Bloomberg Telecoms reporter. She has been tracking the earnings today and she joins us right now from Washington. Kelsey, the mobile phone industry is extremely competitive. We are bombarded by ads constantly from AT &T, Verizon, and T-Mobile trying to undercut each other and offer better terms, better deals. How is AT &T able to add more monthly wireless subscribers than expected in this kind of environment? This is a strategy AT &T has put into place since about last quarter. So back in March, they debuted this new plan that is kind of like an all-in approach. They were modeling it after Peloton or Netflix or one of these sort of like tech lifestyle subscriptions where you pay one price and you have access to everything that you hope to get out of it.

3:42So AT &T's version of that is one price, you get home internet, you get mobile service,

3:49Scarlet Fu:and you get a few connected devices like iPads or Apple Watches thrown in. So that seems like it's been pretty successful. They have introduced some price increases on, I believe, with some of the more legacy plans. That was about$10 to$20 per line. But even with those increases, it seems like customers are responding to some of these newer offers. Kelsey, talk to us about their return of capital plans going forward, because I know that's a big part of the investment story. Right. AT &T has said for a while that they are heavily invested in returning back to their shareholders. And today they announced that they're pulling that forward a little bit.

4:30Scarlet Fu:I think they said they're going to buy back$10 billion instead of just$8 billion in shares this year. So that's a modest uptick that kind of contributes to that optimism that they're expressing in their long-term strategy and growth. I want to just go back to the competitive market landscape for AT &T and the other mobile operators for a moment here, because there's been talk that SpaceX might enter this space. So what's already hyper competitive will get even more so. What is the latest on that front? That's right. We've seen all three of the big telecom carrier stocks take a pretty substantial hit over the last several weeks as speculation about what SpaceX might be up to has sort of taken off.

5:17Scarlet Fu:The telecom carriers have all so far made it pretty clear that they don't want to do any deals that would offer SpaceX access to the market as a peer. But at least T-Mobile is working with SpaceX to fill in some of the gaps in T-Mobile's terrestrial network. That was kind of what John Stanky suggested today. He didn't say specifically that he wants to do a deal with SpaceX, but he did say that he sees satellite generally as being very complementary to the ground-based network that AT &T has. And it could actually potentially help them, you know, make their revenue better because they can fill some gaps in their network with satellite and potentially retire some parts of the network that are very expensive to maintain.

6:02CapEx, Kelsey, it's a capital intensive business, this telecom business. Did the company mention kind of what they're thinking in terms of CapEx going forward?

6:12Scarlet Fu:Well, I can tell you that John Sankey is very bullish on or at least very aware of how agentic AI is changing the network traffic patterns. And so I think he said he expects to see nine times enterprise growth in agentic AI by 2035 and seven times the volume of agentic AI on the consumer side. So those massive increases in essentially AI-driven traffic are things that he's planning for. And they do have a strategy right now, and they're not adjusting that strategy necessarily to account for in their – CapEx. Got it. Stay with us. More from Bloomberg Intelligence coming up after this. Over$100 trillion estimated to be transferred to generations in the next 25 years.

7:08It's both a risk and opportunity because we see that only about 18, 19 percent of high net worth investors plan on sticking with their advisor post-transfer.

7:16Scarlet Fu:This has to be a tough statistic for some to hear. People who work so hard trying to grow their net assets, they want to protect that life work and they want to make sure that it is able to transfer in a seamless way. Support for the show comes from Public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500.

7:56Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., Member FINRA, and SIPC.

8:34Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. Ask yourself, what are your best people spending their time on right now? Expense reports, receipt chasing, month-end close that takes weeks. You become what you spend on, and that's not what you're building toward. Brex is the intelligent finance platform that eliminates that work before it starts. AI agents that handle the manual stuff automatically, so your team can spend their time on what actually compounds. It's time to get Brex AF. Learn more at brex.com slash AF.

9:14Scarlet Fu: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. Stay on the earnings front. Supermicro jumps after early results show rising backlog. The stock is up 24 % today. Just extraordinary. So let's talk to the analyst who covers Supermicro. That'd be Woo Jin-ho. He's in our Princeton office. Woo, talk to us about Supermicro. What did they say with the results and why is the stock up so much today? Yeah. Hey, Paul.

9:49So essentially, it was that stunning backlog figure that they posted, right? So if we think about a month ago when they did an equity raise, they announced that they had$39 billion in backlog at the start of June. That increased to about$60 billion as part of the pre-announcement. So what happens now is that the setup for fiscal 2027 guidance is going to be really, really good. Consensus prior to the backlog guidance was at$53 billion for 27. I'd be shocked if they don't exceed that.

10:27Scarlet Fu:So if Supermicro sees this kind of backlog, what does it mean for its peers, for its competitors? Are they getting a similar lift? Well, I mean, you know, that's a great question, Scarlett. Dell is the market leader in AI servers. I suspect that Dell is going to see similar demand patterns as well, right? Because typically these type of mega deals, AI server deals, are dual source. So if Supermicro is benefiting, Dell is benefiting as well. And Dell stock is up 10 % today in sympathy. So that probably tells the story there. Wooj, how does the memory shortage, the chip shortage and all that kind of stuff, how does that impact the Supermicros of the world?

11:07Because it doesn't seem to be much of an issue. So, you know, we did some analysis on that from the AI server front. It's clear that given the demand for AI servers and the demand for compute, the neoclouds are more than willing to absorb those costs. Now, what's happening on the traditional servers, right, the stuff that powers our own enterprise data centers, customers are desperate for compute because the rising memory costs, they want to avoid the inflation of the AI. the server inflation. So they're actually, I don't know if they're pre-purchasing or pre-buying, but they are buying, it hasn't affected the server business at all.

11:49If anything, the vendors have benefited. Okay.

11:52Scarlet Fu:As we mentioned, Supermicro shares up about 24 % today. So getting a big lift, but still, you know, well below the highs that we saw in early June. So Ujin, this was a preliminary result. The company will actually formally report its quarterly results in mid-August. Have we seen all the upside here? Or is there something that the company might withhold until the actual results that could give this stock another kick? Yeah. So the thing that we're waiting for right now is the gross margin guidance for 27 Scarlett. Look, they gave phenomenal gross margin. They expect phenomenal gross margin, 15 to 17 percent for the fiscal fourth quarter.

12:31And they got it to previously 8.2 to 8.4 percent. Look, I I think it was one mega deal that helped them raise that guidance. I do expect gross margins to come down in 27, but I suspect that there is an uptick in gross margin overall from the 8 % that they delivered in 26 to around 9 % to 10%. If that's going to be the case, given the leverage of the model, you could start seeing a substantial uptick in earnings in 27, even with the dilution from the equity raise. 30 seconds left, Wooch. What is the revenue visibility for a super micro? Seems pretty solid. I mean, from a quarter-to-quarter basis.

13:15I mean, Paul, they've missed their guidance for the past three to five quarters. So their execution has been choppy. But from a full-year basis, it's actually been up and to the right, given how these data centers have been sprouting up, and they've been really wanting to get the NVIDIA chips in their buildings as quickly as possible.

13:39Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. Support for the show comes from Public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On Public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English, like if the VIX hits 25, buy a put option on the S &P 500. Or if my cash balance goes above$20 ,000, move the excess into my direct index. You approve the workflow and your agent handles the rest.

14:17Monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., Member FINRA, and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. If your best finance people are doing expense reports, chasing receipts, or spending time on month-end close, it's time to get Brex AF, a gentic finance that eliminates that work before it starts.

15:06Learn more at brex.com slash AF.

15:09Scarlet Fu:Get the news you need in just 15 minutes. Start your day with Bloomberg Daybreak, the podcast with a global view on the stories that matter. I'm Nathan Hager. And I'm Karen Moscow. Join us each morning for curated stories on current events, politics, business, and foreign relations. Plus one conversation on the day's biggest developments, all in just 15 minutes. Subscribe to Bloomberg Daybreak for a precise, thoughtful take on the stories that matter. Listen to Bloomberg Daybreak each morning on Apple, Spotify, or anywhere you listen. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m.

15:46Scarlet Fu: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. More earnings here today. Philip Morris thinks cigarettes. Now, PM is the ticker. Some numbers out today. Stocks up about 1.65%. Stocks at a 52-week high of 19 % year-to-date. Plus, you get a 3 % dividend yield. So, Philip Morris' shareholder has been quite happy. Let's bring Ken Shea. He's been following this company since the beginning of time for Bloomberg Intelligence. He's seen all the iterations of Philip Morris and Altria and all that kind of stuff.

16:22So, Ken, talk to us about what we saw from Philip Morris today. Yeah, hi, Paul. Philip Morris' numbers today were really good. The headline numbers, top line 10%, beat 5 % expectations. EPS up 15%. Expectations were for 7%. You know, initially, despite those strong numbers, initially the stock in the pre-market was down and I was scratching my head. And I guess it was because they they lowered their guidance on an after currency basis. This company is very international, hence the name. And they said, look, you know, currencies are not going to be quite as favorable as we saw last quarter. But our.

17:06Adjusted currency numbers, we're still looking for high single digit EPS growth. I think investors digested that. They got bullish again.

17:13Scarlet Fu:Right. Philip Morris is basically the international business, right? I mean, Altria is the domestic business, and Philip Morris, I believe, sells Marlboro cigarettes outside the U.S.? That's right, Scarlett. In the late 90s, I should say 2008, I believe it was, this company split. Philip Morris International basically took the Marlboro name and the franchise outside the U.S. Now, Altria, a holding company, owns PMUSA, which owns the Marlboro name, in the U.S. Since that time, though, the two companies have agreed to allow PMI to sell non-cigarette tobacco products in the U.S. And that's why you're seeing them sell Zin, you know, the oral nicotine products, and soon they're going to launch their heat-not-burned vapor product in the U.S., a big potential growth market.

18:02What is Zin? It's all over social media. Can you explain this to me? Zinn is an oral nicotine product, Paul. It comes in those little round cans, maybe plastic containers. But in it, you have 20 pouches that you can get your nicotine buzz. It's a non-tobacco product, you know, spackle-free. You get your nicotine buzz without the ire of your neighbor at work or on the subway or whatever getting annoyed that you're smoking or vaping next to them. So it's a very discreet way of getting your nicotine. And it's doing really well. A lot of smokers are switching over. Interesting. All right.

18:42Scarlet Fu:Is it like nicotine gum? Is it meant to kind of get you off of smoking or is it just a flat out replacement? I mean, is the idea like a smoking cessation device? It's mostly that. Yes. Yes. And that's what the intent is. And that's why the FDA has granted it recently the authorization to promote it as a less harmful source of nicotine as opposed to cigarettes. It's the inhalation of carbons that causes the harm. The FDA acknowledges that if you get your nicotine through your mouth or whatever, it's bypassing that harm. Not to say nicotine is completely safe, but it's a much less harmful form of nicotine ingestion.

19:22Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. Support for this show comes from Public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the risk.

20:01Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., Member FINRA, and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures.

20:37If your best finance people are doing expense reports, chasing receipts, or spending time on month-end close, it's time to get Brex AF, a gentic finance that eliminates that work before it starts. Learn more at brex.com slash AF.

20:53Scarlet Fu:The Bloomberg Sustainable Business Summit returns to Singapore on July 22nd. Our fifth annual Asia-Pacific Summit will explore how business and finance leaders are shaping the next phase of globalization by strengthening resilience and driving a multi-speed energy transition across Asia's diverse markets. Join us for solutions-driven discussions and networking opportunities. Thank you to our summit advisor, Bangkok Bank. Learn more at BloombergLive.com slash SBS dash Singapore.

21:24Scarlet Fu: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. AI very much on our minds right now. And, you know, we look ahead to some of the bigger picture issues that we need to resolve and regulation is and has been coming up quite a bit. Our next guest suggests that perhaps we think about regulating AI the way that we regulate the airline industry. Gautam Akunda is a lecturer at Yale School of Management and a Bloomberg Opinion contributor, and this is exactly what he's written about.