BI Weekend: Deere Earnings, Paramount, UFC Deal

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2:01Post-quotum competing in AI are going to power the future. People are just buying everything with tax. Bloomberg Intelligence with Paul Sweeney. on Bloomberg Radio, YouTube, and Bloomberg Originals. I'm Paul Sweeney. And I'm Lisa Mateo, filling in on Bloomberg Intelligence. On today's Bloomberg Intelligence show, we dig inside the big business stories impacting Wall Street and the global markets. Each and every week, we provide in-depth research and data on some of the 2 ,000 companies and 130 industries our analysts cover worldwide. Today, we'll look at how Paramount buying the rights to UFC fights will impact its streaming service.

2:33Plus, a look at earnings from the networking bellwether Cisco Systems. But first, we look at third quarter earnings from the farm, machinery leader Deere. This week, Deere reported earnings that beat analyst projections, but the company trimmed its projected net income for 2025. This comes as customers remained cautious due to trade uncertainty and the health of the U.S. economy. For more, Lisa and I were joined by Chris Cialino, Bloomberg Intelligence Senior U.S. Machinery Analyst. We first asked Chris for his key takeaways from Deere earnings. Listen, I mean, this really wasn't a particularly great quarter.

3:01Three key results were mixed at best. It was really a low quality earnings beat, primarily driven by a lower tax rate. And as you alluded to, they did cut their 2025 guidance. But to be honest, I don't think that really changes the investment thesis here. You know, we still expect earnings to bottom this year. We're still looking at a very gradual recovery as 2026 unfolds. The reduction in the outlook was really driven by weakness in their construction business. And it appears to us that it was really more of a function of some of the higher tariffs and costs coming through. We knew that construction forestry was really going to bear the brunt of the tariff impact, but this quarter just came in, you know, a little bit more of a headwind than we anticipated.

3:43It doesn't appear to be that there's been much of a change in terms of, you know, farm fundamentals and their appetite to go out and buy equipment. Hey, Chris, can you get more into the struggle that farmers are facing that's impacting deer? Sure. You know, we've been in this kind of prolonged downturn in the ag economy. Crop prices continue to deteriorate. Farm fundamentals remain weak. Interest rates remain high. We have the, you know, the overhang or the uncertainty around the trade environment and export market access. Really, there's really no signs or I would, you know, say green shoots yet that we're at this inflection point.

4:16I think the positive takeaway is that, you know, inventories are coming down. Deer's not going to have to massively underproduce retail demand next year. So even if we're looking at a flattish type of environment in terms of underlying retail demand. We're still looking at probably higher production and some pricing coming through, which should still generate some operating leverage in the business. So Chris, when demand is down from their core farm equipment, what does Deere typically do? Do they let inventories build? Do they get promotional to move inventory out the door? How do they usually manage that?

4:50Yeah, so this is, it's a delicate balancing act right I mean it's almost impossible to time the cycle and what they've been doing you know for the better part of this year and even at the end of last year they had been under producing retail demand to bring down those elevated inventories they've done really a commendable job on new equipment the big issue right now is still on the used equipment inventory side particularly on tractors which are still quite elevated and you're right they are allocating more merchandising programs and pool funds to help address that issue and move the equipment.

5:22And I think you see that partly reflected in their production precision ag business this quarter and pricing actually flipped negative, which was a surprise to us. It does appear that this is, you know, relatively transitory. We should expect pricing to bounce back next quarter. But yeah, it's been a, you know, they've done a real good job of managing inventories. It's just, you know, when you're slogging along through the bottom of the cycle here, it does become quite challenging. So then I got to follow up. Are you still cautious about the pace of their recovery? Yes. You know, I would say signs of recovery are still, you know, pretty elusive to us.

5:55And if you just look over the last couple of months, you know, you continue to see further downward pressure on crop prices, which at the end of the day is one of the bigger drivers of Deere's business and farmer cash receipts. We had a pretty ugly WASDE report this week. You know, it looks like we're going to get another year of record corn production. So those stockpiles continue to build, which is really going to keep somewhat of a ceiling on crop prices here in the near term. So we think this recovery is going to look much more modest or subdued than what we typically see during a normal cycle.

6:26Right now, we're still anticipating a modest flat to up 5 % next year in terms of underlying retail demand for large ag, particularly in North America. Our thanks to Chris Cialino, Bloomberg Intelligence Senior U.S. Machinery Analyst. We move next to a conversation about the global fintech company Nyax. Nyax trades on the NASDAQ under the ticker NYAX. The company is focused on payment software and devices for the self-service space where no cashier is present, and the company recently reported second quarter profit that more than doubled analysts' expectations. This week, guest host Norma Lind and I were joined by Nyax Chief Financial Officer Sagit Manoor, and we began the conversation by asking Sagit for more background on what NIAX does.

7:06So we are actually the global leader in payment and management solution for the unattended market. And what does I mean unattended? It's really the vending machine, massage chair, EV chargers, when it's just you in front of the machine. There's no cashier in between. And in fact, if you bought a drink in a vending machine lately at the JFK, you probably used one of our NIAX yellow devices. So we have more than 100 ,000 customers. We sell our product in more than 120 countries. And we have a very simple mission statement to help our customers grow their business. What does it mean? Increase their revenue, decrease their costs, and through loyalty, create that stickiness with our customers, with their customers.

7:56How do you stay ahead in today's fintech landscape? Of course, there's a lot of players now. So actually, in our area, there's not a lot of competition. I'm talking about the payment in the unattended space. So in fact, you know, we are the only global, as I said, player in this unattended space. It's a very fragmented business and decentralized. So there's a lot of small players and we are with our global solution, basically integrated hardware, payment and services all together. We can bring that to the local market. It's also a very highly regulated market. So there's a lot of barriers to entry.

8:45So whether it's a regulation on payment, whether it's privacy and with our global solution And with us being there for 20 years, we were able to overcome that. We look at ourselves as a payment company. And what do you need as a payment company? You need basically three things. You need the trust, you need the scalability, and you really need the easy doing business. So from a trust perspective, we build that trust over the 20 years. We have a very strong brand. Look now for the yellow devices. You would see that everywhere. from an easy to do business with. It's again, it's a B2B2C. So we have a very, you know, it's a high profile company.

9:27You go to whether it's the car wash to the vending machine and you see us. So B2B, it's all about regulation. And we were able to overcome that. When it comes to B2C, as I said, it's in front of us. And you want that in a nanosecond to get your snack, to get your coffee. So on the scalability, this is where we are focusing, right? This is what takes time to build. And we've showed that we are using more than 80 distributors all around the world, right? So we are setting our product straight to the OEM. So when the vending machine, the massage chair, the kiddie ride are coming from the manufacturers, it will already bring that NIAX device.

10:11Talk to us about the EV business, electric vehicle business. How are you guys approaching that? What is your expectation for how that business will grow for you? So, great question. EV is definitely one of the three main growth drivers as we look into 2025 and even beyond. There's a few elements there. It can be as easy as any unattended verticals that we're already in. and we're already working with the EVgo electrify america electrify canada where we are providing the payment device but it can also be where we are developed the management suite the electricity management suite that has a lot of regulation around it and we were able to to accommodate that as well and then for small businesses which and i haven't mentioned that but most of our customers of small and medium businesses, that's where we provide the all solution, the hardware, the management, electricity, basically, as well as payment.

11:16So EV, we just signed, announced the agreement with HOTEL, which is a potential of 100 ,000 EV charging stations to be deployed in North America and also in Europe. And many other contracts like that that shows the potential with the fact that we are a global company. So it can be done in France or in the state of California. And you have the same exact product all around the globe. Are there any particular market gaps or audiences that are underserved that you're targeting right now? So in the unattended space, which is the majority of our revenue today, definitely there's a place on the EV to grow the electric vehicle charges.

12:08Smart coolers is a very fast growing area. Parking as well. Micro markets. This is in the unattended. But we also are stepping in into more of areas like, as I said, the EB charger that is beyond the payment or even the retail. What we've learned over the 20 years that we're doing business with small businesses is that they're still in the attendant, inside the store, inside the whatever it is that you're selling. is not a good product for those small businesses. And we are expanding that into other countries as well. Our thanks to NIAC's Chief Financial Officer, Sigit Manur. Coming up, a look at where we are with robo-taxis in the U.S.

12:57and the rest of the world. You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in-depth research and data on 2 ,000 companies and 130 industries. You can access Bloomberg Intelligence via BI Go on the terminal. I'm Lisa Mateo. And I'm Paul Sweeney. This is Bloomberg.

13:39disclosures and disclaimers at sebo.com slash us underscore disclaimers. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio.

14:11Start your free trial at adio.com slash iHeart. Amazon Health AI presents Painful Thoughts. I, um, I can't stop scratching my downtown. Yeah, but I'm not itching to go downtown and tell a receptionist I'm here to talk about my downtown. Some things you'd rather type than say out loud. There's no question too embarrassing for Amazon Health AI. Chat your symptoms and get virtual care 24-7. Healthcare just got less painful.

14:46You're listening to Bloomberg Intelligence with Paul Sweeney on Bloomberg Radio. I'm Paul Sweeney. And I'm Lisa Mateo filling in on Bloomberg Intelligence. We move next to some news in the media and entertainment space. This week we heard that Paramount has acquired the exclusive rights to show all events from the ultimate fighting championship in the U.S. over the next seven years. It's a$7.7 billion deal designed to boost Paramount Plus streaming service. For more, Lisa and I were joined by Geetha Ranganathan, Bloomberg Intelligence Analyst on US Media. We first asked Geetha if the UFC can be considered a good deal for Paramount.

15:19No one saw this coming. I mean, the Paramount Skydance transaction just closed last week, August 7th. And we were still kind of waiting for some inkling of what the go to strategy or the go forward strategy would be from, you know, David Ellison's team. And here you go with a bank, you know, paying almost$8 billion for UFC rights. Now, they are premier sports rights. So they're definitely making a big statement here. Yes, you're absolutely right. UFC has over 100 million fans in the United States. Their current deal is with ESPN. They were getting paid about 500 million a year. So this is, you know, more than 120 % surge.

15:57So it is definitely a pretty penny. And what Paramount is hoping is that this really gets them onto the sports arena. So makes them a must have platform. And we're talking here about Paramount Plus, which is their streaming platform, which is known for really some great scripted content and some sports. But this is really a big way for them to kind of make a statement, make a really bold splash on the sports streaming stage. All right, Geetha, I'm trying to take this in stride because my husband is a big UFC fan. So he watches it on ESPN. So does this mean that I have to get Paramount Plus on top?

16:31Don't tell me that, Geetha. Sorry, Lisa. Yes, you do. Because everything, all of the UFC content. So, you know, what we initially thought was that UFC was kind of going to split these packages. You know, they have the fight night, which is the weekly, biweekly kind of, you know, matchups that you see. And then they have their big marquee events, which are the numbered events with, you know, the likes of O 'Connor McGregor, all these other big superstar players. And you got to pay out of your pocket for that pay-per-view. They're actually now making all of that content, both the marquee events as well as the fight nights, all available to Paramount Plus subscribers.

17:08So there's no pay-per-view anymore. But, yeah, unfortunately, your husband's going to have to subscribe to Paramount Plus. Thanks, Geetha. This is what I think you do. Every streamer you put on, you have to take one off. Go to the family. Okay, we're putting on Paramount Plus. What are you giving back to me? What are we giving back? Exactly. That's how you do it. Thank you. Geetha, what is realistically the bull case for Paramount Skydance Corporation? Yes, I think we really need, of course, this kind of tells us that they're definitely going to keep the streaming platform. See, some of the concerns, Paul, before the deal actually closed was what is Skydance really interested in?

17:46So they don't really have any expertise in running TV assets. All that they really cared about was the Paramount studio because Skydance is a big studio and they were really, really interested in the studio assets. So we really didn't have any direction in terms of what they were going to do with the cable networks. Viacom has a bunch of those. You have the CBS Broadcast Network. You have the Paramount Plus streaming platform. What this deal signals is they're definitely interested in the streaming platform and the CBS Broadcast Network, because, you know, they did say that they're going to simulcast some of those UFC games on the CBS Broadcast Network.

18:18So I think that is going to be a core part of their portfolio. What we're still not clear about is what they're going to do with some of the cable networks. So, you know, whether it's a BET or an MTV or a Comedy Central, we really don't know what the strategy is there. Chances are they might look to monetize those assets, you know, sell them. But really, I think the big play for Paramount is going to come down to make these bigger and bigger investments. If they really want to be a credible, you know, streamer, they have to obviously go after these big deals, which is exactly what they did with the UFC.

18:50We'll have to wait and watch and see exactly what their aspirations are. But it depends. If they're willing to kind of make these big investments, they could become arguably one of the top three or one of the top four platforms. Our thanks to Geetha Ranganathan, Bloomberg Intelligence Analyst on U.S. Media. We move next to an M &A deal in the apparel space. This week, we heard that the Canadian clothing company Gildan Activewear agreed to buy the U.S. underwear maker Hanes brand for about$2.2 billion in cash and stock. Gildan is aiming to double its annual sales with the transaction. For more, guest host Norma Linda and I were joined by Abigail Gilmartin, Bloomberg Intelligence footwear and athleisure analyst.

19:29We first asked Abigail to discuss who Gildan is and why they're buying an underwear company. I think a lot of people probably own Gildan and don't know it. Right. Because it's really a basic apparel manufacturer. So they create the t-shirts that then they sell to your favorite sports teams or to Walmart, and then they put the logos on it. So they're heavily in the printware space. They do have exposure to innerwear, which is what Hanes is. Hanes' you know the basics underwears bras tees and they used to be in active wear till they spun off champion so they're very complimentary um yes they spun off champion about a year ago okay interesting and I definitely remember Gilden as you mentioned when you just start to look into the tags of your t-shirts you'll start to see the name pop up there but I mean what's the latest with consolidation more broadly in your industry I know you have a lot of names that you cover that are doing a lot of mergers yeah definitely I think you know it comes at a time with tariffs and costs looming.

20:24As well as, I mean, for this acquisition, I think it's been considered for a while. There was a whole proxy battle about it a few years ago where they actually ousted the CEO over it. And then he has returned since then, and they completely changed the board over. So this didn't come completely out of nowhere, but I think it makes a lot of sense just in terms of, you know, Gildan's building out their whole manufacturing footprint. And it's, once again, really complimentary. They already kind of make everything that Hanes does, but on a larger scale at a lower cost. And Hanes brand's based in Winston-Salem, North Carolina.

20:59Yeah, right there. Talk to us about, you mentioned the tariffs. How is it impacting your world? Because I would think that would be immediate. Yes, so it definitely is impacting my world with, you know, the footwear brands. But for Gildan and Hanes, actually Gildan is one of the largest users of U.S. cotton. So, yes, they are probably one of the largest ones. And so that is actually going to help them not have to deal with as many tariff costs just since products are made with U.S. cotton. So they're subject to a lower tariff rate. So that's actually something that they can benefit from. They also are less exposed to Asia and more in Central America as well as Haines brands.

21:36Their manufacturing footprints are very complementary and overlap. So they'll be able to kind of mitigate that pretty well. But for Haines brands, Gilding gives them a much more financial stability. an opportunity for that. Our thanks to Abigail Gilmartin, Bloomberg Intelligence Footwear and Ethyleisure Analyst. Each week we look at research from Bloomberg NEF, previously known as New Energy Finance. They're the team at Bloomberg that tracks and analyzes the energy transition from commodities to power, transport, industries, buildings, and agriculture sectors. This week we looked at the autonomous vehicles, RoboTaxis.

22:09Guest host Norman Linda and I were joined by Andrew Grant, BNEF Head of Intelligent Mobility. He discussed what's happening in the RoboTaxi space and some of the hot battlegrounds for developers. I began by asking Andrew where we are with RoboTaxis in the US and the rest of the world. Wouldn't it be a great way to have a way to measure the progress that we have on the RoboTaxi side and the self-driving vehicle side? Sometimes it can be quite difficult to monitor the sector and there's a lot of promises made and there's a lot happening in the kind of AI black box. And what we try to do is measure things that you can actually see and count.

22:45So we've been looking at some real operational statistics that have been coming out from some of the robotaxi companies and coming up with a way to grade how serious an operation is. Are these projects actually operating on public roads? Are they offering their rides to the general public or do you need to be on a selective wait list? Are they putting their money where their miles are and charging a fee for the service? Do they actually have a safety driver in the vehicle or humans still supervising in the vehicle or if they pulled that and are they able to operate in all weather conditions 24 hours a day seven days a week and if they kind of score a five out of five in our grade that's a fully functional operational robo taxi service uh we counted out eight of those operating different cities around around the world i should say around the world at the moment it's just china and the us okay so we're seeing china the us as the two leaders here yeah at the moment we have kind of four companies that have met those grades.

23:44We do have another 16 projects that are kind of four out of five on our ranking metric there. I should mention that Tesla just gets two, but a lot of these companies are looking to expand outside their home markets, certainly expanding to places like Singapore, Middle East and the UAE, and then of course, Europe, which at the moment there's regulations that are kind of preventing a wider spread rollout of robotaxis, but a lot of these companies are targeting 2026 for deployment across a number of European cities. So who are the leaders here at this early stage? I mean, really, you're talking about Waymo with the most projects that meet our grading of fully operational robotaxi services.

24:28But from the Chinese automakers, the China robotaxi developer side, you're also talking about Baidu, WeRide, Pony AI that are scoring highly on these metrics and looking to expand. What are some of the regulatory hurdles here? Are there any areas in particular in the United States where it's a bit more open season? It's a very complex regulatory environment at the moment because you can kind of have these national or federal level ambitions, but really it comes down to not just even state level, but down to city level where you need to work really closely with a lot of these regulators to deploy these services in a tightly geofenced environment.

25:10So you need to be actively, if you're a robotaxi developer, you need to be actively talking to a lot of these regulators and helping them understand what you're trying to do and how you're trying to complement what they want to do on the public transport side or on the transport infrastructure side to make this work and make it a valuable project for both entities. So I always describe the regulatory environment. It's very iterative. You kind of need to take one box, prove to your regulators how you're doing, and then continue to grow that relationship and kind of build the regulations with them.

25:43And a lot of knowledge exchange needs to happen as you progress. Yeah, I'm just looking at your self-driving vehicle tractor at www.bnaf.com. Have to be a Bloomberg Terminal user, I believe. Yes. But very, very cool. It's an interactive kind of model, showing you where around the world. So what are the gating issues here, Andrew, for fuller and fuller deployment going out over the next several years? Is it regulatory? Is it technology? Is it capital? What are the key drivers for just, I guess, adoption over the next several years? I mean, we talk a lot about the technology and the regulatory side, and both need to improve.