Warner Bros. Weighs Sale Amid Interest From Several Parties | Bloomberg Intelligence
Summary
Warner Bros. Discovery Sale: Warner Bros. Discovery is undergoing a strategic review to potentially sell the company, with interest from major players like Netflix and Comcast, and rejected bids from Paramount.
Paramount's Position: Paramount has made several bids for Warner Bros. Discovery, with the highest reported offer being $25 per share, but the company is seeking a price closer to $40 per share.
Comcast's Strategy: Comcast is seen as a strong contender for acquiring Warner Bros. Discovery due to its complementary assets, though regulatory approval could be a significant hurdle.
GE Aerospace Performance: GE Aerospace reported strong margins and high demand for aircraft maintenance, though future profitability may plateau as new engine deliveries increase.
RTX Business Overview: RTX, formerly Raytheon, is experiencing growth in its defense and aerospace segments, with strong demand for missile systems and aircraft maintenance parts.
General Motors' Strategy: General Motors is shifting focus away from electric vehicles due to profitability concerns and is benefiting from selling high-margin SUVs and pickup trucks.
Coca-Cola's Growth: Coca-Cola reported better-than-expected earnings, driven by product innovation and strategic refranchising, despite challenges in certain markets like Mexico.
Philip Morris' Smoke-Free Products: Philip Morris is investing heavily in its smoke-free product line, which now constitutes 41% of its business, aiming for long-term growth despite short-term profit guidance adjustments.
Transcript
[Music] 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. >> Netflix Comcast said to be interested in Warner Brothers. Who isn't interested in Warner Brothers Discovery? Again, I spent most of my career putting that company together. Now they're taking it apart. Go figure. That's how the bankers and lawyers get paid. That's how it works, folks. Githa Ranganathan, Bloomberg intelligence analyst. She covers all the media stuff. She's been covering media for gosh, north of 15 years now. One of the best on the street. Githa, I'm going to put it to you. You got to get this deal done. I mean, what happens to Warner Brothers Discovery here? >> Oh, they're going to get sold. Uh, Paul, one way or the other, and and David Slava will will make sure of that. So his whole move this morning uh yes we got the red headline on Netflix and Comcast but before that basically what Warner Brothers management team did is they kind of launched this whole strategic review of the company uh which is which was basically amounting to just putting on like a four sales sign. So you know we know that they wanted to already split their company into two parts. You have the low growth business which was TV networks. You have the other high growth steaming streaming and studios. But really the problem for Warner Brothers Discovery was that they were, you know, I I guess the way that people were thinking about it was not everybody was kind of incentivized to put in a bid for the whole company other than Paramount. And this is really the way that they kind of drum up interest from everybody to kind of get that sale process going. >> So where does Paramount stand? I mean, wasn't their offer too low? Are they going to come back? What are they doing now? >> Yeah. So, you know, uh we had a Bloomberg report suggesting that Paramount made a $20 uh per share offer, which was rejected. Uh there were multiple reports this morning suggested that Paramount actually made several bids for Warner Brothers Discovery, all higher uh than that reported $20 uh price. Uh so probably somewhere even upwards of $25. Uh but again, those were rejected. So this is basically, you know, really kind of forcing Paramount's hand to raise their price pretty significantly. We know, it's been reported that, you know, David Zazlav is seeking something like $40 per share uh for all of the company. Um, and so this is really his way, you know, kind of putting, you know, basically inviting everybody out there to bid on all of the assets, really kind of forcing Paramount to take that price up or the price point up for Warner Brothers pretty pretty dramatically. >> All right, here's my prediction. You heard it here, folks. This will be the biggest M&A ticket certainly in the TMT space ever because they have so many companies have to be bought and sold here. So much financing, so much refinancing. Everybody's going to get paid here. The name that kind of came out of nowhere for some people Githa is Comcast but we know Brian Roberts we know the team there they are very comfortable doing transformational deals here. What do you think Comcast strategy is? >> So this actually Paul if you just kind of think about it even more than Netflix and you know this really well the Warner Brothers Discovery really makes perfect sense for Comcast. I mean they have linear TV assets they have a streaming business with Peacock. They have a fabulous studio with Universal. they could do a lot a lot with the Warner Brothers Discovery assets and and I think everybody's kind of looking at this as a once in a generation as a once- ina-lifetime opportunity. I mean, you let Warner Brothers Discovery go. There's really nothing else on the market that even compares that even comes close to these assets. I mean, you have top tier IP here, whether you're thinking about DC Comics or Harry Potter or Game of Thrones. So, everybody knows they have to do something. I think it makes a lot of sense for Comcast. The only problem for them is really going to be getting regulatory approval. We know that, you know, Brian Roberts has not exactly been in the good graces of either the FCC or the Trump administration. So, that's going to be a difficult hurdle to cross. And then, of course, financing. I mean, this is going to be, as you just said, it's going to be the biggest deal probably for a long time to come in the media space. So, we're looking at, you know, tens of billions of dollars, if not maybe even hundreds. >> Stay with us. More from Bloomberg Intelligence coming up after this. 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. >> We had you know all these companies reporting earnings. Loheed Martin just Rathon some really good numbers. GE Aerospace RTX which is YA Rathon also reported some good numbers. Let's go to uh the analyst who covers this stuff for uh Bloomberg Intelligence, George Ferguson. He's been covering these companies for decades. Uh and he is Bloomberg Intelligence senior aerospace, defense, and airlines analyst. George, let's start with GE Aerospace. Here's a company that, you know, we've all grown up with GE putting itself together, then breaking itself apart into smaller companies. I think the market likes this GE Aerospace business, doesn't it? >> Yeah. So, uh, I think it's telling, too, that, uh, Larry Culp, the CEO of the combined companies, broke them apart and went with the aerospace business, right? That was the, um, that was the crown jewel. They're the they're the largest maker of jet engines globally. Uh, I think they have probably the best technology for jet engines globally. Uh, and look, this was a really nice quarter. Margins were uh, even stronger than we expected. I think they may be close to plateauing though here. there's just a heavy heavy demand for aircraft maintenance even higher than sort of the amount of the increase in airline traffic would indicate um just a lot of pent-up demand and they coming out of the pandemic and some of the newer technology engines just aren't as robust so a lot of people flying the old ones longer uh and we heard a lot of good news about supply chain supply chain sound like it was delivering for Larry it's been generally been a challenge it was delivering and he had parts to put on airplanes and those were high margin parts and each he showed it in the financial statements. >> Hey George, you mentioned maintenance and repair. So does that help the company kind of offset those those higher costs when you have the rise in in the new engine deliveries? >> Yes. So like I said, I think I think we might be seeing a plateau here in the margins we're going to get out of this company. So the airframers, Boeing and Airbus have been slow in ramping up deliveries because they're working through their supply chain challenges. So we really see Boeing and Airbus increasing deliveries of new aircraft all the way to the back end of the decade. And that increase in uh in deliveries is going to, you know, will come with those new engines from GE and RTX for that matter. And those are dilutive to margins. So, you know, so they're kind of in this sweet spot where the um original equipment, you know, shipments haven't taken off yet because Boeing and Airbus are working on that supply chain and they're doing a lot of spare parts deliveries and that's really juicing profitability uh very strongly. So, next year I think becomes more challenging on the whole profitability front. >> All right, George. Uh RTX, the old Rathon I that's kind of how I know this company. Tell us like what's the business of RTX? What are their specialties and what did they report? >> So they uh they make jet engines as well, right? Competitor to GE. They make the Pratt Whitney geared turbo fan. >> Uh they have the Collins business which is uh is all kinds of parts for aircraft. You know it could be brakes, it could be uh landing gear. And then they've got the Rathon business, which is the old Rathon that you know, the defense contractor from up Boston area. And they make uh they make radars, they make missiles, they make air defense kind of equipment. And and like all of the, you know, all of those businesses in that portfolio are really clicking right now. Look, defense is going to grow slower. >> It takes time. the back backlog builds quickly, but it takes a lot longer to build some of those products because they're not, you know, running down a line that that are making, you know, as many like uh, you know, 737s or A320s where you're doing five or 600 a year. These are a lot slower cadence, but we're seeing a lot of lot of demand from customers around the world for missiles and for air defense. And so that backlog continues to build and they building margin in that business. there's still a kind of 11ish 12ish% margin that was quite good uh in that defense business and then at the same time like I just told you for GE the strength of demand for aircraft maintenance right now and the high margin parts that go into it thoroughly drove that Collins business their Collins business is a 13-ish 14%ish operating margin business really seeing strong growth their engine business is not as strong as G's G's returns in the 20 plus% margins. Uh Patton Whitney's kind of an 8 to 9% um operating margin. They've had problems with their latest uh narrow body engines. So, they're managing some of those issues. They just don't have the volume that GE has, but they continue to see margin growth in that business, too, as they deliver spare parts that are some of the older legacy V2500 engines we know them as that power old A320s. really did a nice job in that business and they raised guidance even more than GE going into the back into the last quarter of the year. I think they had some of that in their back pocket, but it looked pretty nice. >> Hey Jordan, before you go, about a minute left. Um, one of the they're one of the largest recipients of US federal contract funding. We're talking about RTX. Um, can you name some of the projects they're working on with the Trump administration? What are they working on? >> Yeah, so I mean they're going to do things like Patriot missile systems. They're going to do a bunch of um sorry, Patriot air defense systems. They're going to do a bunch of missile systems like Gen T. All right, you can think of if you know in air defense you use they make radars as well. You use a radar, you find a target, you uh you sort all the targets you got coming at you at it and then you have to shoot a high value interceptor at that target. And the reason that interceptor is so high value is it's got to go and hit a missile approaching, you know, your position, your country, whatever, which means you put a lot of value ad in that missile so it can go find another one and destroy it. So that that's part of what they're building. They'll also probably be involved in the um in the you know the Global Dome or whatever, you know, the our version of Iron Dome, >> Golden Dome. Yeah. I mean, >> yeah. So there's just a a a lot of demand for the products that they're going to build. >> Stay with us. More from Bloomberg Intelligence coming up after this. >> 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. >> An automaker. General Motors put out some really good numbers here. Um, and the stocks are reacting up double digits here. Steve Man joins us, Bloomberg Intelligence, Global Autos, and Industrials Research Analysts. Steve, what are your takeaways from the results from our friends at General Motors? >> Hey, Paul. Uh, I mean, the the earnings report was just half of the uh the story. The call was very very positive. Uh, that's my takeaway. And the biggest takeaway from that call was really the mix shift towards more, you know, selling more bigger SUVs, the pickup trucks that those are usually the highest margin business for them. >> Now, um they did get some relief from the Trump administration's tariffs on auto parts, right? Wasn't that part of the discussions? >> Yeah. uh tariffs is one thing but I think for 2026 the stars are really aligning uh for higher profit for for General Motors. So you got lower tariffs uh but lower tariff costs for General Motors and for the industry right you have actually the elimination of emission penalties. So a lot of uh in the past automakers in the US had to pay a penalty for selling these gas guzzling SUVs and and pickup trucks. Now they don't have to do that anymore. So that's going to contribute to the bottom line, right? And then they're gonna they're also not going to sell as many EVs. EVs are basically loss making uh for many of the automakers. So you know, you got all these contributors into the for the 2026 earnings. And Steve, maybe this is just me being a, you know, a cynical Wall Street guy, but reading between the lines, I took away that message that they were backing up as much as they possibly could from EVs. And if I'm an investor, that's a positive for me from a profitability standpoint. Is that too much reading between the lines or do you think >> GM and maybe even Ford and Stantis are backing away? >> Absolutely not. They are backing away. Uh GM just took a $1.6 billion charge. uh most of it was to rationalize EV production capacity in the US. I think everybody is seeing that EV sales in the US in the next quarter maybe two quarters will will be down quite a bit uh after the pole head demand. Uh we'll see how it uh how what the penetration is beyond that. But you know they're they're cutting capacity. They're going to have to revisit their portfolio, especially GM. They have launched more vehicles than, you know, their Detroit rivals. So, they're going to have to look at that. So, you know, EVs for GM, you know, they call it variable uh profit, but at the end of the day, the bottom line is still lossmaking for these vehicles. And you know, when when when they sell less of them, uh the mix shift improves, uh you know, you got and then now you're they're probably going to even sell more uh SUVs and and and pickup trucks. Those are typically the highest margin business uh vehicles for them. >> So, what exactly did Mary have to say about the EV adoption? Does she give any specific numbers or or dates ex extend any dates? >> No, she wouldn't. She didn't give any dates. uh but it is still a priority quote unquote priority. She call it the north star for for General Motors. Uh she thinks that long-term uh and she didn't really define what long-term is is that uh there's going to be continued shift uh into EVs. And I think you know when you when you listen to some of the consumers uh in the marketplace you know a lot of them who switched over to EVs uh do like them. um not sure if that the EVs are are going to be their you know their only vehicle. I think it it fits especially in the US marketplace as a second vehicle uh a commuter vehicle. So uh I think you know there will be there will be uh adoption of EVs. I think even before the $7,500 uh credit was was was available uh there was some you know there we did see a start of EV adoption. Stay with us. More from Bloomberg Intelligence coming up after this. >> 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. >> Big big day for earnings. We had the industrial companies out. Uh we also had General Motors out. Got some consumer companies coming out with earnings today as well. Philip Mars, CocaCola. Uh, and we go to Ken Shay. He covers all these consumerf facing companies for Bloomberg Intelligence. Hey Ken, let's talk start with Coca-Cola. I am a Coca-Cola person, but again, it's been widely reported that if you put a Pepsi in front of me, I'm just as happy. But talk to us about Coca-Cola Ken. What'd you hear from them? >> Sure. Hi, Paul. So, Coca-Cola today, uh, they they reported numbers that were slightly better than expected. Um, the organic growth, probably the biggest metric of all, is up about 6%. operating margins widened better than expected. EPS came in a little better. Um so that's why I probably why the shares are trading a little higher today. So it was good. They reiterated their expectations for the full year. They gave a hint for next year. They said basically they see lots of opportunities uh in some product innovation. So look out for things like more roll out of the zero Coke and Sprites, zero sugar I should say. um more Fairlife uh protein drinks, more enhanced and low sugar uh sports drinks and enhanced waters. So, these are really the the franchise full beverage products that they're known for and so they're going to continue to innovate next year. I should ask one other quick thing, another big news with Coke today is that they were successful in sort of their reffranchising. Basically, what that means is they're monetizing a lot of their bottling assets. um they were instrumental in selling some 75% of their uh Coca-Cola Africa unit today. Um so anyway, what that does is streamlines and strengthens their global bottling network. And so I think that was another reason for investor encouragement today. >> Yeah, that was some big news that came out um earlier before the earnings came out. Um now if we talk about earnings, you said that consumers are still buying the drinks, but they're buying them at higher prices too. Yeah, >> they are for the most part. And that's one of the things Coca-Cola uh did mention today. He said, you know, I mean, again, a company that's this global, you're going to have pockets of strength and weakness. And so they said, you know, in some areas are doing well. Uh people are trading up and still favoring the premium products. Um affordability though is a key issue in other big markets. So Mexico, for instance, is having a tough time macroeconomics. Uh, and by the way, Mexico uh is also going to pass a big sugar tax uh beginning of next year. So, they're a little wary on that. And so, they're going to be rolling out a lot of affordability, universal bottles, returnable bottles, uh, smaller packages sizes. So, the company, you know, it's been doing this a long time though. So, they've been through, you know, some of these es and flows of of the markets. It's well positioned. >> Uh, Philip Mars, uh, this is the, uh, the tobacco company. They had some numbers out today. Um, stock trading down a little bit here today. >> Yeah, Paul, Bill Morris also hit their numbers. Uh, it was a really strong quarter. Uh, EPS on a comparable basis of up 17%. Strong topline margin improvement. It was hard to find any fault with the actual numbers that came in. But I think what what um may have gotten a little some people a little nervous was that they lowered their guidance for operating organic operating earnings. Uh, and a lot of that is just reinvestment in the business. One of the biggest products successes in recent years has been this Zin oral nicotine product. It's a non-tobacco pouch product. You put, you know, put in your mouth, you don't spit, get your nic uh your nicotine buzz that way. It's doing wonderful. Uh the company said that uh now that it has recently added some manufacturing capacity and has some more supplies, it's going to look to expand the market. How do you expand the market? you convince smokers to move to a non-combustible variety, particularly in the US. So, it's spending quite a bit of money to do that. And so, for those, you know, with the short-term mind, I guess, um they were a little nervous about, you know, that lowered guidance for operating earnings. But, um I think they're doing the smart thing longer term, though. If you're a long-term investor, it's hard, it's hard to find fault in that strategy. >> How big is their smokefree business? It's now about 41% of their total business and way of ahead of their competitors. When I say smoke free, you're talking about a combination of things. Uh the so-called heat not burn IOS family of products that contains actually uh some nicotine in there that it heats it. It doesn't burn it. You have the uh the Rivve e vapor product kind of like an ecigarette. Um and then you also have the Zin oral nicotine product. So it's combined you have really three really strong franchises and they're at the point now where the com on a combined basis they're more profitable from an operating margin standpoint than their conventional cigarette business. So the faster this thing grows and has a bigger proportion of their business. It's all good from a margin standpoint. >> This is the Bloomberg Intelligence Podcast available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday 10:00 a.m. to noon Eastern on Bloomberg.com, the iHeart Radio app, TuneIn, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.
Warner Bros. Weighs Sale Amid Interest From Several Parties | Bloomberg Intelligence
Summary
Transcript
[Music] 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. >> Netflix Comcast said to be interested in Warner Brothers. Who isn't interested in Warner Brothers Discovery? Again, I spent most of my career putting that company together. Now they're taking it apart. Go figure. That's how the bankers and lawyers get paid. That's how it works, folks. Githa Ranganathan, Bloomberg intelligence analyst. She covers all the media stuff. She's been covering media for gosh, north of 15 years now. One of the best on the street. Githa, I'm going to put it to you. You got to get this deal done. I mean, what happens to Warner Brothers Discovery here? >> Oh, they're going to get sold. Uh, Paul, one way or the other, and and David Slava will will make sure of that. So his whole move this morning uh yes we got the red headline on Netflix and Comcast but before that basically what Warner Brothers management team did is they kind of launched this whole strategic review of the company uh which is which was basically amounting to just putting on like a four sales sign. So you know we know that they wanted to already split their company into two parts. You have the low growth business which was TV networks. You have the other high growth steaming streaming and studios. But really the problem for Warner Brothers Discovery was that they were, you know, I I guess the way that people were thinking about it was not everybody was kind of incentivized to put in a bid for the whole company other than Paramount. And this is really the way that they kind of drum up interest from everybody to kind of get that sale process going. >> So where does Paramount stand? I mean, wasn't their offer too low? Are they going to come back? What are they doing now? >> Yeah. So, you know, uh we had a Bloomberg report suggesting that Paramount made a $20 uh per share offer, which was rejected. Uh there were multiple reports this morning suggested that Paramount actually made several bids for Warner Brothers Discovery, all higher uh than that reported $20 uh price. Uh so probably somewhere even upwards of $25. Uh but again, those were rejected. So this is basically, you know, really kind of forcing Paramount's hand to raise their price pretty significantly. We know, it's been reported that, you know, David Zazlav is seeking something like $40 per share uh for all of the company. Um, and so this is really his way, you know, kind of putting, you know, basically inviting everybody out there to bid on all of the assets, really kind of forcing Paramount to take that price up or the price point up for Warner Brothers pretty pretty dramatically. >> All right, here's my prediction. You heard it here, folks. This will be the biggest M&A ticket certainly in the TMT space ever because they have so many companies have to be bought and sold here. So much financing, so much refinancing. Everybody's going to get paid here. The name that kind of came out of nowhere for some people Githa is Comcast but we know Brian Roberts we know the team there they are very comfortable doing transformational deals here. What do you think Comcast strategy is? >> So this actually Paul if you just kind of think about it even more than Netflix and you know this really well the Warner Brothers Discovery really makes perfect sense for Comcast. I mean they have linear TV assets they have a streaming business with Peacock. They have a fabulous studio with Universal. they could do a lot a lot with the Warner Brothers Discovery assets and and I think everybody's kind of looking at this as a once in a generation as a once- ina-lifetime opportunity. I mean, you let Warner Brothers Discovery go. There's really nothing else on the market that even compares that even comes close to these assets. I mean, you have top tier IP here, whether you're thinking about DC Comics or Harry Potter or Game of Thrones. So, everybody knows they have to do something. I think it makes a lot of sense for Comcast. The only problem for them is really going to be getting regulatory approval. We know that, you know, Brian Roberts has not exactly been in the good graces of either the FCC or the Trump administration. So, that's going to be a difficult hurdle to cross. And then, of course, financing. I mean, this is going to be, as you just said, it's going to be the biggest deal probably for a long time to come in the media space. So, we're looking at, you know, tens of billions of dollars, if not maybe even hundreds. >> Stay with us. More from Bloomberg Intelligence coming up after this. 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. >> We had you know all these companies reporting earnings. Loheed Martin just Rathon some really good numbers. GE Aerospace RTX which is YA Rathon also reported some good numbers. Let's go to uh the analyst who covers this stuff for uh Bloomberg Intelligence, George Ferguson. He's been covering these companies for decades. Uh and he is Bloomberg Intelligence senior aerospace, defense, and airlines analyst. George, let's start with GE Aerospace. Here's a company that, you know, we've all grown up with GE putting itself together, then breaking itself apart into smaller companies. I think the market likes this GE Aerospace business, doesn't it? >> Yeah. So, uh, I think it's telling, too, that, uh, Larry Culp, the CEO of the combined companies, broke them apart and went with the aerospace business, right? That was the, um, that was the crown jewel. They're the they're the largest maker of jet engines globally. Uh, I think they have probably the best technology for jet engines globally. Uh, and look, this was a really nice quarter. Margins were uh, even stronger than we expected. I think they may be close to plateauing though here. there's just a heavy heavy demand for aircraft maintenance even higher than sort of the amount of the increase in airline traffic would indicate um just a lot of pent-up demand and they coming out of the pandemic and some of the newer technology engines just aren't as robust so a lot of people flying the old ones longer uh and we heard a lot of good news about supply chain supply chain sound like it was delivering for Larry it's been generally been a challenge it was delivering and he had parts to put on airplanes and those were high margin parts and each he showed it in the financial statements. >> Hey George, you mentioned maintenance and repair. So does that help the company kind of offset those those higher costs when you have the rise in in the new engine deliveries? >> Yes. So like I said, I think I think we might be seeing a plateau here in the margins we're going to get out of this company. So the airframers, Boeing and Airbus have been slow in ramping up deliveries because they're working through their supply chain challenges. So we really see Boeing and Airbus increasing deliveries of new aircraft all the way to the back end of the decade. And that increase in uh in deliveries is going to, you know, will come with those new engines from GE and RTX for that matter. And those are dilutive to margins. So, you know, so they're kind of in this sweet spot where the um original equipment, you know, shipments haven't taken off yet because Boeing and Airbus are working on that supply chain and they're doing a lot of spare parts deliveries and that's really juicing profitability uh very strongly. So, next year I think becomes more challenging on the whole profitability front. >> All right, George. Uh RTX, the old Rathon I that's kind of how I know this company. Tell us like what's the business of RTX? What are their specialties and what did they report? >> So they uh they make jet engines as well, right? Competitor to GE. They make the Pratt Whitney geared turbo fan. >> Uh they have the Collins business which is uh is all kinds of parts for aircraft. You know it could be brakes, it could be uh landing gear. And then they've got the Rathon business, which is the old Rathon that you know, the defense contractor from up Boston area. And they make uh they make radars, they make missiles, they make air defense kind of equipment. And and like all of the, you know, all of those businesses in that portfolio are really clicking right now. Look, defense is going to grow slower. >> It takes time. the back backlog builds quickly, but it takes a lot longer to build some of those products because they're not, you know, running down a line that that are making, you know, as many like uh, you know, 737s or A320s where you're doing five or 600 a year. These are a lot slower cadence, but we're seeing a lot of lot of demand from customers around the world for missiles and for air defense. And so that backlog continues to build and they building margin in that business. there's still a kind of 11ish 12ish% margin that was quite good uh in that defense business and then at the same time like I just told you for GE the strength of demand for aircraft maintenance right now and the high margin parts that go into it thoroughly drove that Collins business their Collins business is a 13-ish 14%ish operating margin business really seeing strong growth their engine business is not as strong as G's G's returns in the 20 plus% margins. Uh Patton Whitney's kind of an 8 to 9% um operating margin. They've had problems with their latest uh narrow body engines. So, they're managing some of those issues. They just don't have the volume that GE has, but they continue to see margin growth in that business, too, as they deliver spare parts that are some of the older legacy V2500 engines we know them as that power old A320s. really did a nice job in that business and they raised guidance even more than GE going into the back into the last quarter of the year. I think they had some of that in their back pocket, but it looked pretty nice. >> Hey Jordan, before you go, about a minute left. Um, one of the they're one of the largest recipients of US federal contract funding. We're talking about RTX. Um, can you name some of the projects they're working on with the Trump administration? What are they working on? >> Yeah, so I mean they're going to do things like Patriot missile systems. They're going to do a bunch of um sorry, Patriot air defense systems. They're going to do a bunch of missile systems like Gen T. All right, you can think of if you know in air defense you use they make radars as well. You use a radar, you find a target, you uh you sort all the targets you got coming at you at it and then you have to shoot a high value interceptor at that target. And the reason that interceptor is so high value is it's got to go and hit a missile approaching, you know, your position, your country, whatever, which means you put a lot of value ad in that missile so it can go find another one and destroy it. So that that's part of what they're building. They'll also probably be involved in the um in the you know the Global Dome or whatever, you know, the our version of Iron Dome, >> Golden Dome. Yeah. I mean, >> yeah. So there's just a a a lot of demand for the products that they're going to build. >> Stay with us. More from Bloomberg Intelligence coming up after this. >> 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. >> An automaker. General Motors put out some really good numbers here. Um, and the stocks are reacting up double digits here. Steve Man joins us, Bloomberg Intelligence, Global Autos, and Industrials Research Analysts. Steve, what are your takeaways from the results from our friends at General Motors? >> Hey, Paul. Uh, I mean, the the earnings report was just half of the uh the story. The call was very very positive. Uh, that's my takeaway. And the biggest takeaway from that call was really the mix shift towards more, you know, selling more bigger SUVs, the pickup trucks that those are usually the highest margin business for them. >> Now, um they did get some relief from the Trump administration's tariffs on auto parts, right? Wasn't that part of the discussions? >> Yeah. uh tariffs is one thing but I think for 2026 the stars are really aligning uh for higher profit for for General Motors. So you got lower tariffs uh but lower tariff costs for General Motors and for the industry right you have actually the elimination of emission penalties. So a lot of uh in the past automakers in the US had to pay a penalty for selling these gas guzzling SUVs and and pickup trucks. Now they don't have to do that anymore. So that's going to contribute to the bottom line, right? And then they're gonna they're also not going to sell as many EVs. EVs are basically loss making uh for many of the automakers. So you know, you got all these contributors into the for the 2026 earnings. And Steve, maybe this is just me being a, you know, a cynical Wall Street guy, but reading between the lines, I took away that message that they were backing up as much as they possibly could from EVs. And if I'm an investor, that's a positive for me from a profitability standpoint. Is that too much reading between the lines or do you think >> GM and maybe even Ford and Stantis are backing away? >> Absolutely not. They are backing away. Uh GM just took a $1.6 billion charge. uh most of it was to rationalize EV production capacity in the US. I think everybody is seeing that EV sales in the US in the next quarter maybe two quarters will will be down quite a bit uh after the pole head demand. Uh we'll see how it uh how what the penetration is beyond that. But you know they're they're cutting capacity. They're going to have to revisit their portfolio, especially GM. They have launched more vehicles than, you know, their Detroit rivals. So, they're going to have to look at that. So, you know, EVs for GM, you know, they call it variable uh profit, but at the end of the day, the bottom line is still lossmaking for these vehicles. And you know, when when when they sell less of them, uh the mix shift improves, uh you know, you got and then now you're they're probably going to even sell more uh SUVs and and and pickup trucks. Those are typically the highest margin business uh vehicles for them. >> So, what exactly did Mary have to say about the EV adoption? Does she give any specific numbers or or dates ex extend any dates? >> No, she wouldn't. She didn't give any dates. uh but it is still a priority quote unquote priority. She call it the north star for for General Motors. Uh she thinks that long-term uh and she didn't really define what long-term is is that uh there's going to be continued shift uh into EVs. And I think you know when you when you listen to some of the consumers uh in the marketplace you know a lot of them who switched over to EVs uh do like them. um not sure if that the EVs are are going to be their you know their only vehicle. I think it it fits especially in the US marketplace as a second vehicle uh a commuter vehicle. So uh I think you know there will be there will be uh adoption of EVs. I think even before the $7,500 uh credit was was was available uh there was some you know there we did see a start of EV adoption. Stay with us. More from Bloomberg Intelligence coming up after this. >> 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. >> Big big day for earnings. We had the industrial companies out. Uh we also had General Motors out. Got some consumer companies coming out with earnings today as well. Philip Mars, CocaCola. Uh, and we go to Ken Shay. He covers all these consumerf facing companies for Bloomberg Intelligence. Hey Ken, let's talk start with Coca-Cola. I am a Coca-Cola person, but again, it's been widely reported that if you put a Pepsi in front of me, I'm just as happy. But talk to us about Coca-Cola Ken. What'd you hear from them? >> Sure. Hi, Paul. So, Coca-Cola today, uh, they they reported numbers that were slightly better than expected. Um, the organic growth, probably the biggest metric of all, is up about 6%. operating margins widened better than expected. EPS came in a little better. Um so that's why I probably why the shares are trading a little higher today. So it was good. They reiterated their expectations for the full year. They gave a hint for next year. They said basically they see lots of opportunities uh in some product innovation. So look out for things like more roll out of the zero Coke and Sprites, zero sugar I should say. um more Fairlife uh protein drinks, more enhanced and low sugar uh sports drinks and enhanced waters. So, these are really the the franchise full beverage products that they're known for and so they're going to continue to innovate next year. I should ask one other quick thing, another big news with Coke today is that they were successful in sort of their reffranchising. Basically, what that means is they're monetizing a lot of their bottling assets. um they were instrumental in selling some 75% of their uh Coca-Cola Africa unit today. Um so anyway, what that does is streamlines and strengthens their global bottling network. And so I think that was another reason for investor encouragement today. >> Yeah, that was some big news that came out um earlier before the earnings came out. Um now if we talk about earnings, you said that consumers are still buying the drinks, but they're buying them at higher prices too. Yeah, >> they are for the most part. And that's one of the things Coca-Cola uh did mention today. He said, you know, I mean, again, a company that's this global, you're going to have pockets of strength and weakness. And so they said, you know, in some areas are doing well. Uh people are trading up and still favoring the premium products. Um affordability though is a key issue in other big markets. So Mexico, for instance, is having a tough time macroeconomics. Uh, and by the way, Mexico uh is also going to pass a big sugar tax uh beginning of next year. So, they're a little wary on that. And so, they're going to be rolling out a lot of affordability, universal bottles, returnable bottles, uh, smaller packages sizes. So, the company, you know, it's been doing this a long time though. So, they've been through, you know, some of these es and flows of of the markets. It's well positioned. >> Uh, Philip Mars, uh, this is the, uh, the tobacco company. They had some numbers out today. Um, stock trading down a little bit here today. >> Yeah, Paul, Bill Morris also hit their numbers. Uh, it was a really strong quarter. Uh, EPS on a comparable basis of up 17%. Strong topline margin improvement. It was hard to find any fault with the actual numbers that came in. But I think what what um may have gotten a little some people a little nervous was that they lowered their guidance for operating organic operating earnings. Uh, and a lot of that is just reinvestment in the business. One of the biggest products successes in recent years has been this Zin oral nicotine product. It's a non-tobacco pouch product. You put, you know, put in your mouth, you don't spit, get your nic uh your nicotine buzz that way. It's doing wonderful. Uh the company said that uh now that it has recently added some manufacturing capacity and has some more supplies, it's going to look to expand the market. How do you expand the market? you convince smokers to move to a non-combustible variety, particularly in the US. So, it's spending quite a bit of money to do that. And so, for those, you know, with the short-term mind, I guess, um they were a little nervous about, you know, that lowered guidance for operating earnings. But, um I think they're doing the smart thing longer term, though. If you're a long-term investor, it's hard, it's hard to find fault in that strategy. >> How big is their smokefree business? It's now about 41% of their total business and way of ahead of their competitors. When I say smoke free, you're talking about a combination of things. Uh the so-called heat not burn IOS family of products that contains actually uh some nicotine in there that it heats it. It doesn't burn it. You have the uh the Rivve e vapor product kind of like an ecigarette. Um and then you also have the Zin oral nicotine product. So it's combined you have really three really strong franchises and they're at the point now where the com on a combined basis they're more profitable from an operating margin standpoint than their conventional cigarette business. So the faster this thing grows and has a bigger proportion of their business. It's all good from a margin standpoint. >> This is the Bloomberg Intelligence Podcast available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday 10:00 a.m. to noon Eastern on Bloomberg.com, the iHeart Radio app, TuneIn, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.