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You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Easter on Applecarplay and the Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Easter on Applecarplay and the Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

Happy Friday, everybody, I'm Alexe alongside Paul Sweeney. This is Bloomberg Intelligence Radio. We bring you all the top news in business, economics, and finance through our lens of our Bloomberg Intelligence folks. They cover two thousand companies in one hundred and thirty industries worldwide.

Happy Friday, everybody, I'm Alexe alongside Paul Sweeney. This is Bloomberg Intelligence Radio. We bring you all the top news in business, economics, and finance through our lens of our Bloomberg Intelligence folks. They cover two thousand companies in one hundred and thirty industries worldwide.

Every day.

Every day.

We also take a look at the Bloomberg Big Take story. It's a deep dive into some of the pressing financial, political, and economic issues of our time. You can check it out on the terminal or also Bloomberg dot com slash Big Take. And today it's about banker bonuses. Wall Street bonuses often come in the form of restricted stock units, So how did that actually perform? It's dicey, it's unpredictable. Do you actually make money off of those things?

We also take a look at the Bloomberg Big Take story. It's a deep dive into some of the pressing financial, political, and economic issues of our time. You can check it out on the terminal or also Bloomberg dot com slash Big Take. And today it's about banker bonuses. Wall Street bonuses often come in the form of restricted stock units, So how did that actually perform? It's dicey, it's unpredictable. Do you actually make money off of those things?

Well?

Well?

Joining us now is one of the authors of the story. Laura Noonan, Bloomberg News finance reporter Walkers to your story, Laura.

Joining us now is one of the authors of the story. Laura Noonan, Bloomberg News finance reporter Walkers to your story, Laura.

Thank you.

Thank you.

So the story basically looked at the restricted shares over a period from the Frantic christ Sinteszan Night, and the question we wanted to ask is how does the number on the letter you get on bonus day compare to how much you actually get by the time those shares best. So we assume certain things, and what we showed was that in the case of the US banks, you usually end up making more, in the case of the European banks, you usually end up making less. And in some cases the numbers were quite severe. So there was one case we looked at where the Bank of America people who got bonuses in twenty eleven slash twenty twelve, they ended up if they had sold them as they could over a three year period, they would have got two hundred and seventy thousand dollars for every one hundred and for every one hundred thousand dollars in the letter. So that's a big upside off the end of the spectrum of the credit Switez. Bankers who got bonuses towards the end of credit spesis life would have seen the money effectively disappear when credits fee is collapsed in twenty twenty three.

So the story basically looked at the restricted shares over a period from the Frantic christ Sinteszan Night, and the question we wanted to ask is how does the number on the letter you get on bonus day compare to how much you actually get by the time those shares best. So we assume certain things, and what we showed was that in the case of the US banks, you usually end up making more, in the case of the European banks, you usually end up making less. And in some cases the numbers were quite severe. So there was one case we looked at where the Bank of America people who got bonuses in twenty eleven slash twenty twelve, they ended up if they had sold them as they could over a three year period, they would have got two hundred and seventy thousand dollars for every one hundred and for every one hundred thousand dollars in the letter. So that's a big upside off the end of the spectrum of the credit Switez. Bankers who got bonuses towards the end of credit spesis life would have seen the money effectively disappear when credits fee is collapsed in twenty twenty three.

Are we see investment banks pay more of the bonus in stock or RSUs less cash more. Is that a trend.

Are we see investment banks pay more of the bonus in stock or RSUs less cash more. Is that a trend.

It's been a trend since the financial crisis, which is why we started the analysis there. So the idea was to align the risk taking of the people who are making bonuses with the longer term fate of the banks that.

It's been a trend since the financial crisis, which is why we started the analysis there. So the idea was to align the risk taking of the people who are making bonuses with the longer term fate of the banks that.

They work for.

They work for.

Within the EU, there are rules about this, so you have to get a certain percentage of your bonus in these kind of restricted instruments, and the percentage that you get is higher depending on how senior you are. So it's certainly something the banks have been doing for risk management.

Within the EU, there are rules about this, so you have to get a certain percentage of your bonus in these kind of restricted instruments, and the percentage that you get is higher depending on how senior you are. So it's certainly something the banks have been doing for risk management.

They're also doing it in terms of.

They're also doing it in terms of.

Pretention, in terms of if you are a really strong bank and your share price they expected to appreciate, and we want people to stay working for you, it makes sense to give them things which kind of align their fate with the fate of the bank because it makes them stay, which is what banks are trying to do, especially as they face more competition for for staff from other industries like tes like some of the non listed banks and the and the private markets industry.

Pretention, in terms of if you are a really strong bank and your share price they expected to appreciate, and we want people to stay working for you, it makes sense to give them things which kind of align their fate with the fate of the bank because it makes them stay, which is what banks are trying to do, especially as they face more competition for for staff from other industries like tes like some of the non listed banks and the and the private markets industry.

Paul's here shaking his head like it.

Paul's here shaking his head like it.

I'm just going to keep my mouth shed here because I think about the Europeans in their pay structure, and you don't like that.

I'm just going to keep my mouth shed here because I think about the Europeans in their pay structure, and you don't like that.

Ball not a fan.

Ball not a fan.

That's why there's no global investment bank coming out of Europe. That's why there's no technology coming out of I mean.

That's why there's no global investment bank coming out of Europe. That's why there's no technology coming out of I mean.

It's a fair point, like okay, I mean is a recovering former m and a media banker. So this is near and dear.

It's a fair point, like okay, I mean is a recovering former m and a media banker. So this is near and dear.

There are a lot of issues in European investment banks and we will be telling you more about that. Those in different There are some unique structural issues around bank pay. Those do limit their capacity to attract some people. It's going to be really interesting in the UK market now because the UK has just ruled off some of those crisis some of those rules introduced in the EU. The EUP obviously is outside the EU now they are liberating things here. It's going to be a really interesting market to see how people respond in terms of do people want to work for a Joyty Bank MP Paraba within the London operators now or would they be even more likely to go to a Gunman Sachs at JP Morgan where you can now get really big bonuses.

There are a lot of issues in European investment banks and we will be telling you more about that. Those in different There are some unique structural issues around bank pay. Those do limit their capacity to attract some people. It's going to be really interesting in the UK market now because the UK has just ruled off some of those crisis some of those rules introduced in the EU. The EUP obviously is outside the EU now they are liberating things here. It's going to be a really interesting market to see how people respond in terms of do people want to work for a Joyty Bank MP Paraba within the London operators now or would they be even more likely to go to a Gunman Sachs at JP Morgan where you can now get really big bonuses.

Can I just ask about the whole credit Sueeze debacle there, like what happened to all of those bonuses and payouts, etc. When you take a look at Deutsche Bank and Credit Sweeze.

Can I just ask about the whole credit Sueeze debacle there, like what happened to all of those bonuses and payouts, etc. When you take a look at Deutsche Bank and Credit Sweeze.

So Deutsche Bank has just had a very troubled share price situation. I mean, if you look at the share of Deutsche since Cintomatic crisis, it has pretty much it had a very very sharp decline over that period. So you know, I knew people who had Deutsche bonuses and they were like, oh, this will be the best trade I've ever made, because you get a lot of shares when your share price is low to get you to that dollar number. And they expected the share price to recover. The share price did not recover. It fell further and further and further. So they just had a very tough time share price wise. Creditsweez was interesting because if you look back over the analysis, there were some years when actually Credit sweez stock did really well, and that was because in the immediate after math of the crisis kind of ten eleven twelve is actually very strong. Where came crashing down to earth was in the more recent past when those shares effectively got zeroed by the collapsash takeover from Yes, there's a lot of nuance there. What I should also say is, for this analysis, we looked at twelve banks, the twelve banks who most commonly give bonuses. However, we have a tool for the terminal users. You can go on that you can click on it. You can enter any listed company in the world. You can enter any kind of vesting structure. You might have any dates, and you can see how your life would have been different if you got your bonus at a different bank, or if you made different career choices when you were like twenty five, or you know how your colleagues down the road have done. So there is a lot of fun that you can have. If you're into playing with Excel sheets, you're.

So Deutsche Bank has just had a very troubled share price situation. I mean, if you look at the share of Deutsche since Cintomatic crisis, it has pretty much it had a very very sharp decline over that period. So you know, I knew people who had Deutsche bonuses and they were like, oh, this will be the best trade I've ever made, because you get a lot of shares when your share price is low to get you to that dollar number. And they expected the share price to recover. The share price did not recover. It fell further and further and further. So they just had a very tough time share price wise. Creditsweez was interesting because if you look back over the analysis, there were some years when actually Credit sweez stock did really well, and that was because in the immediate after math of the crisis kind of ten eleven twelve is actually very strong. Where came crashing down to earth was in the more recent past when those shares effectively got zeroed by the collapsash takeover from Yes, there's a lot of nuance there. What I should also say is, for this analysis, we looked at twelve banks, the twelve banks who most commonly give bonuses. However, we have a tool for the terminal users. You can go on that you can click on it. You can enter any listed company in the world. You can enter any kind of vesting structure. You might have any dates, and you can see how your life would have been different if you got your bonus at a different bank, or if you made different career choices when you were like twenty five, or you know how your colleagues down the road have done. So there is a lot of fun that you can have. If you're into playing with Excel sheets, you're.

In for a fun weekend.

In for a fun weekend.

And I guess, I mean, you have some great stuff in here about how the best year for bank bonuses was twenty twenty twelve because I guess, you know, depressed values and after.

And I guess, I mean, you have some great stuff in here about how the best year for bank bonuses was twenty twenty twelve because I guess, you know, depressed values and after.

That prices were not good. Yeah, so it's something some parts of better, kind of counter intuitive. But thinking about depressed values is they and this kind of goes without saying, but they have to recover. So I've seen people make some pretty bad decisions thinking that that, thinking that things will always rebound to some kind of normal. The one thing we've learned in European bank since the financial crisis is like me and reversion hasn't really been a thing in the way people think it was going to be. Some business models turned out to be, you know, structurally flowed, structurally fatally flowed in the case of credit sweet So you can't always assume that it's going to bounce back, because I mean, if you talk to the credit feece Banger, they talk to the Liman bankers who live a different era. But they also and then I know a few people who work for both Lehman and Credits Feet and you know the Times Violin. They're silk white rich guys. However, they will be much in picture guys in other places.

That prices were not good. Yeah, so it's something some parts of better, kind of counter intuitive. But thinking about depressed values is they and this kind of goes without saying, but they have to recover. So I've seen people make some pretty bad decisions thinking that that, thinking that things will always rebound to some kind of normal. The one thing we've learned in European bank since the financial crisis is like me and reversion hasn't really been a thing in the way people think it was going to be. Some business models turned out to be, you know, structurally flowed, structurally fatally flowed in the case of credit sweet So you can't always assume that it's going to bounce back, because I mean, if you talk to the credit feece Banger, they talk to the Liman bankers who live a different era. But they also and then I know a few people who work for both Lehman and Credits Feet and you know the Times Violin. They're silk white rich guys. However, they will be much in picture guys in other places.

All Right, Laura, thanks a lot. We're gonna leave it there. Thank you very much. Lauren and a Bloomberg News finance reporter joining us on Banker Bonuses.

All Right, Laura, thanks a lot. We're gonna leave it there. Thank you very much. Lauren and a Bloomberg News finance reporter joining us on Banker Bonuses.

You were listening to the Bloomberg Intelligence Podcast. Catch the program live weekdays at ten am Eastern on Apple car Play and Android Auto with the Bloomberg business app you can all so listen live on Amazon Alexa from our flagship New York station, Just Say Alexa played Bloomberg eleven thirty one.

You were listening to the Bloomberg Intelligence Podcast. Catch the program live weekdays at ten am Eastern on Apple car Play and Android Auto with the Bloomberg business app you can all so listen live on Amazon Alexa from our flagship New York station, Just Say Alexa played Bloomberg eleven thirty one.

Stock on the move to the upside is Baker Hughes. It is the best performing stock in the energy sector within the SMP. Baker Hughes is an oil services company. It has two main lines. One is literally oil services, so if you're an oil driller, you call Baker to help you drill the oil. The other is industrial and energy technology that's much more related to sort of the future of what the business will be. Encapsulates LNG export facilities, which they are a huge provider of. And this stock has car rushed its competition. You look at a comp chart Baker Hughes versus A, Halliburton and SLB. They've crushed it over the last year. They reported earnings last night the beat very high estimates and yet the stock is still up by about six percent. Were pleased to have the CEO, President and Chairman, Lorenzo Seminelli joining us. Now, Lorenzo, good to chat with you. I gave you a nice set up there. What do you think that you have if Pears don't.

Stock on the move to the upside is Baker Hughes. It is the best performing stock in the energy sector within the SMP. Baker Hughes is an oil services company. It has two main lines. One is literally oil services, so if you're an oil driller, you call Baker to help you drill the oil. The other is industrial and energy technology that's much more related to sort of the future of what the business will be. Encapsulates LNG export facilities, which they are a huge provider of. And this stock has car rushed its competition. You look at a comp chart Baker Hughes versus A, Halliburton and SLB. They've crushed it over the last year. They reported earnings last night the beat very high estimates and yet the stock is still up by about six percent. Were pleased to have the CEO, President and Chairman, Lorenzo Seminelli joining us. Now, Lorenzo, good to chat with you. I gave you a nice set up there. What do you think that you have if Pears don't.

Say that again, Alex, what do.

Say that again, Alex, what do.

You have that your other peers don't in your best estimation?

You have that your other peers don't in your best estimation?

Well, Alex, firstval it's great to be with you and very pleased with the results of twenty twenty four.

Well, Alex, firstval it's great to be with you and very pleased with the results of twenty twenty four.

And I think it.

And I think it.

Really talks to the portfolio and the capabilities of baking US. And as you mentioned, we have these two segments, one being oil field services and equipment and then the other being industrial and energy technology, and that capability of really being focused on where there's less cyclicality, less volatility. As you look at oil field services and equipment, we're much more on the production side, weighted and looking at the mature asset solutions. And when you look at the industrial energy technology, really on the liquefaction side, the gas infrastructure and also new energy and again we exceeded the guidance for new energy orders take in twenty twenty four, looking for another robust twenty twenty five. And it really comes down to the differentiation in the portfolio. And we're really not just an all field services company. We're an industrial energy technology company, and you know, we've created a portfolio that's unique within the space.

Really talks to the portfolio and the capabilities of baking US. And as you mentioned, we have these two segments, one being oil field services and equipment and then the other being industrial and energy technology, and that capability of really being focused on where there's less cyclicality, less volatility. As you look at oil field services and equipment, we're much more on the production side, weighted and looking at the mature asset solutions. And when you look at the industrial energy technology, really on the liquefaction side, the gas infrastructure and also new energy and again we exceeded the guidance for new energy orders take in twenty twenty four, looking for another robust twenty twenty five. And it really comes down to the differentiation in the portfolio. And we're really not just an all field services company. We're an industrial energy technology company, and you know, we've created a portfolio that's unique within the space.

All Right, Lorenzos, I've been telling Alex, who is the true expert here in Bloomberg for energy. I have watched season one of land Man, so I now consider myself an oil and gas expert. Just putting that in front of you there. Love to get your thoughts. Lorenzo on the implications of this new administration coming up. How much of a change in policy do you and your peers expect out of a Trump administration.

All Right, Lorenzos, I've been telling Alex, who is the true expert here in Bloomberg for energy. I have watched season one of land Man, so I now consider myself an oil and gas expert. Just putting that in front of you there. Love to get your thoughts. Lorenzo on the implications of this new administration coming up. How much of a change in policy do you and your peers expect out of a Trump administration.

You know, we've seen administrations in the past and changes, and obviously we had Trump administration previously as well. As we look at the outlook again, we think that an number of our customers and EMPs are going to continue to be disciplined, and we're seeing activity levels and production at least in the US slightly increasing. As we look at international again we see flatish year over year. But again I think as we look at the macro side, it's over the course of the next few years and the next decade and increasing demand for energy, and that means it's an all of the above strategy. It's going to be oil gas, it's going to be more renewables, and we see a good outlook on the macro side for Baker Hughes.

You know, we've seen administrations in the past and changes, and obviously we had Trump administration previously as well. As we look at the outlook again, we think that an number of our customers and EMPs are going to continue to be disciplined, and we're seeing activity levels and production at least in the US slightly increasing. As we look at international again we see flatish year over year. But again I think as we look at the macro side, it's over the course of the next few years and the next decade and increasing demand for energy, and that means it's an all of the above strategy. It's going to be oil gas, it's going to be more renewables, and we see a good outlook on the macro side for Baker Hughes.

In that environment, he does talk about Landman like all the time. So to break that down a little bit, I was talking to Mike Worth's CEO of Chevron earlier, and basically his theme in the Permian is to produce more.

In that environment, he does talk about Landman like all the time. So to break that down a little bit, I was talking to Mike Worth's CEO of Chevron earlier, and basically his theme in the Permian is to produce more.

But with less, so less capex.

But with less, so less capex.

It feels like the read through of that for the oil services business wouldn't be great for you guys. Walk me through what you're seeing from the big oil players.

It feels like the read through of that for the oil services business wouldn't be great for you guys. Walk me through what you're seeing from the big oil players.

Again, as I mentioned the big old players, they're going to take the opportunity of benefiting from the consolidation and the acreage that they're bringing on.

Again, as I mentioned the big old players, they're going to take the opportunity of benefiting from the consolidation and the acreage that they're bringing on.

And what Mike.

And what Mike.

Is mentioning is really the aspect of doing more with what you have. And that's why Baker Hughes is well suited because we're more.

Is mentioning is really the aspect of doing more with what you have. And that's why Baker Hughes is well suited because we're more.

On the production side. And again, as you.

On the production side. And again, as you.

Look at our portfolio, greater than fifty percent is associated with the production. That's the electrical submassible pumps, it's the chemicals, it's the ability to really take more.

Look at our portfolio, greater than fifty percent is associated with the production. That's the electrical submassible pumps, it's the chemicals, it's the ability to really take more.

Out of the mature assets.

Out of the mature assets.

And that's been a big focus of Baker Hughes over the course of the last few years. And so as the intensity continues to increase on doing more with less, it actually serves the aspect of our production side and focus that we have on the mature assets.

And that's been a big focus of Baker Hughes over the course of the last few years. And so as the intensity continues to increase on doing more with less, it actually serves the aspect of our production side and focus that we have on the mature assets.

Yeah, I'm glad you brought that up, because that's kind of what my word was saying too, that like the technology just gets so much better that you can actually continue to get more oil, lower the cycle costs, and lower the cycle time. Switching to your IET business, so industrials and energy, a technology business, that's where you have sort of your LNG export facilities, it is, that's where the growth is going to come from. Your numbers for the first quarter and for all of this year are just trouncing estimates. Who is your big customer for this.

Yeah, I'm glad you brought that up, because that's kind of what my word was saying too, that like the technology just gets so much better that you can actually continue to get more oil, lower the cycle costs, and lower the cycle time. Switching to your IET business, so industrials and energy, a technology business, that's where you have sort of your LNG export facilities, it is, that's where the growth is going to come from. Your numbers for the first quarter and for all of this year are just trouncing estimates. Who is your big customer for this.

Well, we've got the large LNG players obviously within North America, and we're looking forward to a number of FIDS taking place in twenty twenty five. Overall globally for LNG again, we see one hundred mtpa of new projects between twenty four and twenty.

Well, we've got the large LNG players obviously within North America, and we're looking forward to a number of FIDS taking place in twenty twenty five. Overall globally for LNG again, we see one hundred mtpa of new projects between twenty four and twenty.

Six over the course of this year.

Six over the course of this year.

You know, there's still about eighty mtpa to go internationally as well as also in the US.

You know, there's still about eighty mtpa to go internationally as well as also in the US.

But it's not just the LNG.

But it's not just the LNG.

It's you know, when you look at gas infrastructure and the associated infrastructure around pipelines being required compression to be able to move the molecule, the LNG players Venture Global which we announced yesterday as well. You've got Shineer, but you've got the majors when you think of Katar Gas as well as Exon Mobile with the projects.

It's you know, when you look at gas infrastructure and the associated infrastructure around pipelines being required compression to be able to move the molecule, the LNG players Venture Global which we announced yesterday as well. You've got Shineer, but you've got the majors when you think of Katar Gas as well as Exon Mobile with the projects.

That they have.

That they have.

So we play across the portfolio with these key customers.

So we play across the portfolio with these key customers.

But it's not just LNG.

But it's not just LNG.

You know, seventy percent of the addressable market opportunity for us in IT over the course of the next few years is outside of LNG, and that's one hundred and forty billion dollar opportunity.

You know, seventy percent of the addressable market opportunity for us in IT over the course of the next few years is outside of LNG, and that's one hundred and forty billion dollar opportunity.

Where is it outside of LNG And do you anticipate any acquisitions to even beat that up even more?

Where is it outside of LNG And do you anticipate any acquisitions to even beat that up even more?

You know, we're benefiting from the fact that our equipment can be utilized in multiple end applications. So when you go onshore offshore production, when you look at FPSOs and we consistent theme of seven to nine FPSOs on an annual basis. When you look at pipeline infrastructure, you look at downstream.

You know, we're benefiting from the fact that our equipment can be utilized in multiple end applications. So when you go onshore offshore production, when you look at FPSOs and we consistent theme of seven to nine FPSOs on an annual basis. When you look at pipeline infrastructure, you look at downstream.

You need pumps, you need valves, you.

You need pumps, you need valves, you.

Need reciprocating compressors, you need turbines, and increasingly behind the meta solutions as well, distributed power generation and we've got a line of industrial gas turbans obviously below one hundred and fifty megawat and when you think of the data center growth that's going to be taking place, it's a large opportunity for us as we go forward.

Need reciprocating compressors, you need turbines, and increasingly behind the meta solutions as well, distributed power generation and we've got a line of industrial gas turbans obviously below one hundred and fifty megawat and when you think of the data center growth that's going to be taking place, it's a large opportunity for us as we go forward.

Does that mean that, Lorenzo, you're going to be able to play in the AI data center rush?

Does that mean that, Lorenzo, you're going to be able to play in the AI data center rush?

We already are playing in the aspect of providing behind the meta solutions and also distributed power generation with our Nova LT line and as we're working with a number of hyperscalers and AI is definitely a theme that we see growing and the need for data centers growing, and they're going to need short solutions forgetting.

We already are playing in the aspect of providing behind the meta solutions and also distributed power generation with our Nova LT line and as we're working with a number of hyperscalers and AI is definitely a theme that we see growing and the need for data centers growing, and they're going to need short solutions forgetting.

The power Before I let you go, because you know I'm going to ask it. You got those two huge business lines. Any any theories or feelings about a spin off.

The power Before I let you go, because you know I'm going to ask it. You got those two huge business lines. Any any theories or feelings about a spin off.

There is a tremendous amount of synergies between the two. And what's great about Baker Hughes is that we can navigate with less cyclicality, less volatility because it doesn't matter on the pace of the transition. We actually match with the capabilities of oil field services and equipment and the industrial energy technology, and we actually link the value chain together. And as you think of subsurface knowledge with then being able to move the molecule and do something with the molecule from a compression standpoint, liquefaction or moving it elsewhere. The two segments were hand in hand together, so we liked the portfolio of the way that is.

There is a tremendous amount of synergies between the two. And what's great about Baker Hughes is that we can navigate with less cyclicality, less volatility because it doesn't matter on the pace of the transition. We actually match with the capabilities of oil field services and equipment and the industrial energy technology, and we actually link the value chain together. And as you think of subsurface knowledge with then being able to move the molecule and do something with the molecule from a compression standpoint, liquefaction or moving it elsewhere. The two segments were hand in hand together, so we liked the portfolio of the way that is.

I knew you were going to say that one, Lorenzo.

I knew you were going to say that one, Lorenzo.

It's great to chat with you.

It's great to chat with you.

I love catching up with you. Lorenzo Saminelli, President, chairman and CEO of Baker Hughes. That' stock up over a six percent And today.

I love catching up with you. Lorenzo Saminelli, President, chairman and CEO of Baker Hughes. That' stock up over a six percent And today.

You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

News came out today that surprised me, talking about the US Justice Department blocking HPE's acquisition of Juniper Networks. What happened to the animal spirits of a Republican white House, Republican Congress pulling back on regulation. This one kind of threw me for a curve. So we went to the expert u Jinhoe Senior technolog channels from Bloomberg Intelligence. Wooje was this expected, what's going on here.

News came out today that surprised me, talking about the US Justice Department blocking HPE's acquisition of Juniper Networks. What happened to the animal spirits of a Republican white House, Republican Congress pulling back on regulation. This one kind of threw me for a curve. So we went to the expert u Jinhoe Senior technolog channels from Bloomberg Intelligence. Wooje was this expected, what's going on here.

Hey, Paul, it wasn't expected. I think there were some rumblings going on earlier in the week that the DJ made blocked the deal for anti competitive reasons, and then when the deal was close, close to the finish line, Woomer was next week a DJ decided to step in. What's the problem, Well, it's all about Wi Fi and it's clear that HPE can't live without its Wi Fi either. You know, the combination of HPE and Juniper would create twenty percent Wi Fi market share in the United States in the North America, and if you combine that with Cisco, it would have over seventy percent. So the DOJ is essentially saying that it would create an anti competitive environment in the wireless landspace.

Hey, Paul, it wasn't expected. I think there were some rumblings going on earlier in the week that the DJ made blocked the deal for anti competitive reasons, and then when the deal was close, close to the finish line, Woomer was next week a DJ decided to step in. What's the problem, Well, it's all about Wi Fi and it's clear that HPE can't live without its Wi Fi either. You know, the combination of HPE and Juniper would create twenty percent Wi Fi market share in the United States in the North America, and if you combine that with Cisco, it would have over seventy percent. So the DOJ is essentially saying that it would create an anti competitive environment in the wireless landspace.

Both stocks are kind of flat to a little bit up here today. So what's the market telling us here, Well.

Both stocks are kind of flat to a little bit up here today. So what's the market telling us here, Well.

The market is telling us for a Juniper standpoint, there might be a we're getting closer to evaluation floor if HPE needs to walk away. What we did right this morning was that we think that there is a nine to ten billion dollar valuation on a standalone Juniper. That gets us to about a twenty eight to thirty two dollars share price. It slight discount where it's trading right now. Now from an HPE standpoint, you know, it's something a different signal. One of the reasons why they wanted to acquire Juniper as a whole is for a margin perspective. So the stock is down about ten percent and some of the margin decretion related Juniper might be falling off.

The market is telling us for a Juniper standpoint, there might be a we're getting closer to evaluation floor if HPE needs to walk away. What we did right this morning was that we think that there is a nine to ten billion dollar valuation on a standalone Juniper. That gets us to about a twenty eight to thirty two dollars share price. It slight discount where it's trading right now. Now from an HPE standpoint, you know, it's something a different signal. One of the reasons why they wanted to acquire Juniper as a whole is for a margin perspective. So the stock is down about ten percent and some of the margin decretion related Juniper might be falling off.

What could they do to save this deal?

What could they do to save this deal?

Is there anything that they could offer?

Is there anything that they could offer?

Yeah, so look at the end of the day, there's one particular product that Juniper has called missed and that was automated the Wi Fi functionality as well as delivered some AI functionality. You know, HP doesn't want to walk away from that, but if they walk away from that portion of the deal, that could possibly preserve the deal. But you know, with Antonio trying to do to keep to go through with the lawsuit, they really want Missed and quite frankly, I think it's one of the crown jewels of the deal.

Yeah, so look at the end of the day, there's one particular product that Juniper has called missed and that was automated the Wi Fi functionality as well as delivered some AI functionality. You know, HP doesn't want to walk away from that, but if they walk away from that portion of the deal, that could possibly preserve the deal. But you know, with Antonio trying to do to keep to go through with the lawsuit, they really want Missed and quite frankly, I think it's one of the crown jewels of the deal.

So which I know you probably speak to Jenrie at Bloomberg Intelligence. She does all this anti trust stuff. How are you guys thinking about this? What are you telling your clients? Is it still going to get done? Is it not gonna get done? Are they going to walk away? What do you think is gonna happen?

So which I know you probably speak to Jenrie at Bloomberg Intelligence. She does all this anti trust stuff. How are you guys thinking about this? What are you telling your clients? Is it still going to get done? Is it not gonna get done? Are they going to walk away? What do you think is gonna happen?

Yeah, you know, I've been going back and forth with with Jen, and you know what Jen is telling us as well as Bloomberg Bloomberg clients is that the DJ actually may have a strong case. Quite quite frankly, I think it's kind of a bunk from from a DJ standpoint. You know, Hpe is getting penalized for Cisco having fifty percent market share, right and one of the arguments that the DJ is making is that there might be an increase in price. But you know, the historical trend has been Hpe actually has been a price leader in terms of having lower price for their wireless land products versus where Cisco is a price you know, is a price leader where they have the highest price. So, you know, I don't know where it'll be. But if uh, Jens generally says that DJ has a case, HPE may need to find alternatives.

Yeah, you know, I've been going back and forth with with Jen, and you know what Jen is telling us as well as Bloomberg Bloomberg clients is that the DJ actually may have a strong case. Quite quite frankly, I think it's kind of a bunk from from a DJ standpoint. You know, Hpe is getting penalized for Cisco having fifty percent market share, right and one of the arguments that the DJ is making is that there might be an increase in price. But you know, the historical trend has been Hpe actually has been a price leader in terms of having lower price for their wireless land products versus where Cisco is a price you know, is a price leader where they have the highest price. So, you know, I don't know where it'll be. But if uh, Jens generally says that DJ has a case, HPE may need to find alternatives.

So let's pretend that deodee h does have a case. What's a plan B or I guess what does Juniper and HPE look without a deal?

So let's pretend that deodee h does have a case. What's a plan B or I guess what does Juniper and HPE look without a deal?

Yeah?

Yeah?

So, uh, the way I look at it right now is that the there actually is still a lot of synergies. You know, Juniper has a data center networking UH data center uh A as well as cloud routing.

So, uh, the way I look at it right now is that the there actually is still a lot of synergies. You know, Juniper has a data center networking UH data center uh A as well as cloud routing.

UH.

UH.

These are two areas that HPE does not have, and it actually would fit well UH with HPE's portfolio. From a valuation standpoint, you know, we think that UH the standalone missed piece would be about two point seven to three point five billion dollars if you back that out of the original UH fourteen billion dollar price, we're talking about a ten two eleven billion dollar deal. UH, Juniper valuation X missed. So you know it it it'll still work out, and and there are still UH areas of synergies, but you are missing out about a billion plus in revenue if you carve out missed.

These are two areas that HPE does not have, and it actually would fit well UH with HPE's portfolio. From a valuation standpoint, you know, we think that UH the standalone missed piece would be about two point seven to three point five billion dollars if you back that out of the original UH fourteen billion dollar price, we're talking about a ten two eleven billion dollar deal. UH, Juniper valuation X missed. So you know it it it'll still work out, and and there are still UH areas of synergies, but you are missing out about a billion plus in revenue if you carve out missed.

Which about thirty seconds left. What's your favorite name here in your space these days?

Which about thirty seconds left. What's your favorite name here in your space these days?

Ironically, it's HPA Okay, and the quick AI. It's the AI story. It's the I think they're going to start gaining some AI sent them in the quarter.

Ironically, it's HPA Okay, and the quick AI. It's the AI story. It's the I think they're going to start gaining some AI sent them in the quarter.

All right, great stuff with Jinho Senior Technology. Channleal for Bloomberg Intelligence joining us via the Zoom from Princeton, New Jersey. Appreciate that so again, Hpe, Juniper do oj blocking kind of surprised. I think a lot of us who were expecting these animal spirits from a regulatory standpoint to take over and be kind of the wild West out there for M and A.

All right, great stuff with Jinho Senior Technology. Channleal for Bloomberg Intelligence joining us via the Zoom from Princeton, New Jersey. Appreciate that so again, Hpe, Juniper do oj blocking kind of surprised. I think a lot of us who were expecting these animal spirits from a regulatory standpoint to take over and be kind of the wild West out there for M and A.

But MAK you not.

But MAK you not.

This is a Bloomberg Intelligence podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, ten am to noon Eastern on Bloomberg dot com, the iHeartRadio app tune In, and the Boomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.

This is a Bloomberg Intelligence podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, ten am to noon Eastern on Bloomberg dot com, the iHeartRadio app tune In, and the Boomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.

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