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Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. Other than my friends, I'm just trying to make you a little money. My job is not just to entertain, but this in context is a wild day. So call me 1-800-743-CBC. Tweet me at Jim Kramer. So last night I'm getting ready for a big anniversary show and in the corner of my eye, I see the name Starbucks stock down five and change.
And I'm bored. I got to say, I'm steamed. Not the company or the CEO, Brian Nicol, or even the coffee. No, I was steamed because of the stupid sellers who were furiously dumping the stock as fast as they could. Sell, sell, sell, sell, sell, sell. It's Brian Nicol. How dare they? The market opened up hideously off an awful gross domestic product number this morning, showed the economy actually shrinking. Oh, my God.
23% in the first quarter. So Starbucks was just part of the red ink that drenched us. But as I have stressed now over since the bottom a couple weeks ago, we've got some real resilience going on now. And the average spent the rest of the day on the rise, levitating to where the Dow closed in the black, gaining 142 points. S&P rose 0.15%. NASDAQ lost 0.09%. But considering that after the close, both Microsoft and Meta
Bye, bye, bye, bye, bye. Reported terrific numbers. I think the Nasdaq could be flying tomorrow. More on those two later. But let's go back to the Starbucks. Because while it was able to bounce off of the 76 level, down more than $8, it still finished down $4.80. I think that's plain wrong.
I think it's actually playing an opportunity. Buy, buy, buy! Why? Because of nickel, that's why. You see, I find that when you have a bankable jockey and Brian's the man who previously turned around Chipotle, the operator took the chain from the brink of food contamination death and moved the stock up 776% during his tenure versus 109% for the S&P. Well, you got to ride him with nickel. You got to ride him with Starbucks. Newfound glory coming. Are the shareholders really so ridiculous that they dumped Starbucks only six months into this run?
the indignity this stock worked from 77 when he was appointed 115 a few months ago
Yeah, you're just back below 80 and they still won't stop the bombing and the darn thing? It started the day at the same price the stock wasn't when he announced he got the job. Fortunately, I had the privilege of interviewing Brian when Starbucks was down four in pre-market trading and we straightened out a couple of misperceptions. For example, when he addresses stores directly, they start to turn immediately. He's already addressed 2,000 and then he's working on 3,000. He's fixed the most important problem Starbucks had, the throughput. How long it took you to get it, right? Meaning how long? It was way too long. It was a nightmare.
An uneven place where you could even wait 15 minutes to get your coffee. That is now over. Average wait time is now down to four minutes, often much less than that. Brian's reversing years of too much spending on machines and not enough spending on people. He's got the Chinese division running flat and been down 6 percent last quarter. Eight of the top 10 foreign markets putting up positive same store sales. He intends to double the store base. Astronomical growth coming. In other words, he's going to pull off a classic Brian Nicol turnaround.
Now, I know there's still a lot wrong with the company. Turnover, team issues, not as friendly as it should be. I get that. This is how you end up with terrible gross margins and you got too much staff and not enough customers, something I know from my restaurant days. But this is a case where you simply have to bet on the jockey and remember that he can turn the horse around and make it a winner. Oh, and how about those analysts who said buy above $100 and now hated it at $80? I say...
And good luck. Now, we've seen this all earnings season. We know this is a tough moment, right? We have tariffs that are putting the wood to profitability. We have a world where commerce seems to be grinding to a halt. We have inflation. But some companies can keep delivering in spite of this environment. Now, I got two of them to put it after the close tonight. We heard from two of the magnificent seven tech giants, Microsoft and Meta Platforms, and both are reminders of how important it is to have a proven winner like nickel at the top.
Microsoft, led by the excellent CEO Satya Nadella, reported a terrific set of numbers this evening. A sizable top and bottom line beat. Each of their three major segments came in better than expected. Intelligent cloud division leading the way, up 22% constant currency. I did not see that coming. I think 35% constant currency revenue growth from Azure. I didn't see that coming either. And other cloud services far better than the 31% number for the analysts we're looking for.
It was sterling. Now, at Microsoft, we always have to note that the company's guidance comes during the earnings conference call, which is ongoing. And for the last few quarters, they punished us with soft guidance. But make no mistake, these results were excellent. And they are a reminder that the Microsoft that Nadella inherited could never have pulled off these numbers. Bet on the jockey. If Microsoft was good, and it was, particularly that Azure number, wow, then Mark Zuckerberg's meta was great.
Revenue grew 19 percent constant currency exceeded expectations by nearly a billion dollars. Earnings per share were up a whopping 37 percent to six dollars and forty three cents. More than a dollar over the five to five point two seven cents. Wow. The company's main user metric family daily active people came in at three point four three billion upside.
up 6% year over year and above expectations. And Meta also disclosed that Meta AI, the company's generative AI offering, now has almost 1 billion monthly active users. The top line growth came in from a combination of 5% increase in ad impressions, 10% increase in average price per ad,
Both were very encouraging in a world where investors have been worried about how a softer macro environment would impact an ad-driven business like Meta. Now, because of those concerns about a slowdown in advertising, we were also very pleased that Meta's second quarter revenue guidance of $42.5 billion to $45.5 billion was in line with expectations. It's even slightly ahead of the $43.8 billion consensus estimate at the midpoint. That's probably just as big as the driver of the stock's after-hours gains as the huge beats for the first quarter. I
And I have to tell you, tonight's earnings report, Meta did not just reiterate its colossal 2025 capital expenditure forecast. It raised it to $64 to $72 billion, up from $60 to $65 billion. That would be very good for, yes, NVIDIA. It's gigantic, not just for Meta, but for the entire AI complex, which has been hit very hard over the past three months because of fears that the mega cap tax would cut back their spending. It does not look to be the case. Meta is certainly not doing that.
The company said specifically that its new CapEx outlook reflects additional data center investments to support artificial intelligent efforts. In tonight's call, Zuckerberg did an excellent and thorough job of describing the many different opportunities the company sees in AI and explaining why the company is eager to make these major AI-related investments. You bet against Zuckerberg at your own peril.
And I've got to tell you, he was on fire this evening, as I know that we're going to tell club members, because it's been tough to own these stocks of late. So here's the bottom line. We got tremendous numbers tonight from Mark Zuckerberg's Meta, Satya Nadella's Microsoft. But people just gave up on Brian Nicol and Starbucks. Funny how it is. Just when we give up on a company, it turns out to be doing great things that we didn't see. It happened with Nadella and Zuckerberg at times, and people abandoned them. They regret it now.
I say the same thing can happen with nickel at Starbucks. It's worth considering as he's as good a jockey as the rest of them. Let's go to Perose in California. Perose. Hey, Jim. Thanks for taking my call. I want to say congrats on the 20th anniversary. And thank you to your staff and everybody else. Thank you very much. I appreciate that. Yeah. So I just wanted to ask you with.
Today's world going towards more digital world. So with software companies like Palantir and Andro winning government contracts with the Department of Defense, do you think C3 AI will also be a beneficiary with this shift?
Well, I'll tell you, it keeps losing money. Tom Siebel should not have that keep happy. He's the chairman, CEO, founder. There are so many better ones out there as much as I like Tom. I'm just going to tell you, no, go with something that's even, that's high. Now, Palantir is a meme stock and we know that. I would say Surface Now works.
I think Bill McDermott, you know, Bill McDermott's like one of these great jockeys that I'm talking about. He has turned that company around. He has done great things there, and he is the leader in AI. I think McDermott. I think ServiceNow. Look, sometimes you have to keep the faith in leaders of great companies, and I know leaders like Ryan Satchinadella and Mark Zuckerberg are worth betting on. Mad Money Tonight, fresh off today's post-earnings pop for Yum! Brands.
I'm talking consumer sentiment, innovation, and more with its CEO. Then, could we see the weaker dollar gain some more green against this back row backdrop? I'm going to up the charts to find out. Plus, how are tariffs shaping the consumer electronics space? I got exclusive with Logitech after the stock sank today on earnings. So stay with Kramer.
Don't miss a second of Mad Money. Follow at Jim Kramer on X. Have a question? Tweet Kramer. Hashtag Mad Mentions. Send Jim an email to madmoneyatcnbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com.
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Get out! All right, that was awful. I need to ask you, what's wrong with this picture? Oh, jeez, he spotted the mac and cheese immediately. How long can we wait for time water? Based on the success of the show, at least one of the C's in CNBC is Kramer. Welcome to Man Money.
Can you say booyah, please? Booyah. How about I bring out one of the first-namers? Martha, come on out. I have to thank Daryl Hammond from SNL. Bye, Oculogix, and stay with Kramer. Look at his shoulders on this guy. Do you work out a little bit?
Let me tell you right now, man, everybody wants this freaking show. Howard, welcome to the show. Hey, Jim, the only thing bad about this is I'm not with you in the studio. Capitalism for the future has to be one of generosity and one of shared success. A company cannot win on the backs of its people. I just want to hear from the co-founder, chairman, and CEO and total gen, Mark Benioff. We started Salesforce because we so strongly believe that business is the greatest platform for change.
companies that value their people and respect their people that are decent are typically successful companies we're in some incredible market the smartphone market eventually everyone in the world will have a smartphone
There is a culture of innovation in Apple. This virtuous ecosystem is something that is probably underappreciated. We really feel that this is our time. We've got the scale. We've done the localization. This is a culmination of what we've been working on for three plus years.
And it's here and it's now. The way that I think about this is in the near term, AI is just this really massive wave that we're riding for all of our services. If we can make sure that we create the conditions by which amazing people do their life's work, they're going to create amazing products that will help great customers and there'll be prosperity and there'll be joy.
We've had some amazing guests over the years from Mad Money, and the executives we've brought on the show have always given all Cray Americans the best look at how companies across the country are faring. And while the market's still trying to find its footing right now, some companies are just doing fabulously. Look at Yum Brands. That's a parent of KFC, Taco Bell,
pizza and the lesser known Habit Burger Grill. This morning, Yum! reported a solid quarter. Better than expected. Same store sales growth with their top two brands, Taco Bell and KFC crushing it. Now, one of the stocks still up 12 percent for the year and a very tough tape, particularly for consumer goods and restaurants. So can this one keep hanging in there, even with all the worries about consumer sentiment? Let's take a close look with David Gibbs, the CEO of Yum! Brands, to find out. Mr. Gibbs, welcome back to Mad Money.
Hi, Jim. Great to be on. And congratulations on the 20th anniversary of Mad Money. Thank you, David. Thank you. And I know you've been with me and your company's been with me the whole way. And we've been with you the whole way because you offer a great bargain everywhere around the world. And once again, I think it shows this particular quarter that when you give people...
Good food for low prices. They go nuts for it and buy at levels like what I'm seeing with Taco Bell that is unlike any large mature chain is coming up with. How do you do it?
You're exactly right, Jim. I think this quarter proved the resilience of our model and that we can truly win in any environment. But of course, we've been doing that for the same 20 years that you've been running your show. I looked it up. We've had 15 percent annual shareholder returns during that 20-year period compared to the S&P 500 at 10 percent. No, it's amazing. Look, it's pretty obvious the way you do it. First of all, you have growth. I mean, you have unmitigated growth. I don't
I don't think people realize how huge you are. You've added, what, 11,000 since you came in? But just tell people how big these units are. They're gigantic.
Yeah, obviously our business is pretty much going from strength to strength. We had a challenged year in 2024 in terms of the environment we operated in, but yet we delivered on our 8% operating profit commitment. In terms of the scale that you're talking about, of course, it's a 60,000 plus units. We open a new store every other hour all year long.
And our brands are dominant in the markets where you operate. And obviously Taco Bell in the U.S. is a powerhouse. You referenced it, plus 9% in Q1 is an amazing result in an environment where the rest of the competition is reporting negative numbers or flat numbers. And then internationally, KFC International, another really strong quarter, 7% unit growth.
You know, we're building new KFC every other every three hours. So these are brands that are going from strength to strength and poised to succeed in any environment. Well, let me ask you, is there room for many more? I mean, some people would say that with this many units, you got to be saturated.
Oh, I mean, we think the amazing thing about our business is we've got 70-year-old brands. We've got 60,000 restaurants. We've got more restaurants ahead of us than we've already built. And you can see it in the numbers. And the numbers that our franchisees are reporting, when they talk about the returns they're getting, they're talking about getting two- and three-year cash paybacks
new units. You know, we have 15 publicly traded franchisees that are building these stores. They wouldn't be putting their capital into our brands unless they were getting stellar returns. And that's exactly what I do love your model. I've got to tell you, I think there's a lot far fewer headaches, much better way to expand, particularly in a period, by the way, when some people say expansion costs too much money. I know that's not a problem for you guys. I do want to ask you, you're uniquely American brands, any pushback, whether it be tariffs or whether it be
I don't know. What can you say? Political. I don't want to characterize because I'm not trying to be Democrat or Republican, but just some pushback because we're Americans.
Yeah, one of the hallmarks of our business is the way we connect with consumers and the way we stay on top of consumer trends. So we're always out there taking the pulse of the consumer all around the world. We have not seen any pushback related to tariffs in any of the markets that we operate in. We are not affected by tariffs, as you know, for the most part, as most of our supply chain is usually sourced within country. So our model is pretty insulated from what's going on right now. And that's why you're seeing the success we're having. Do you think that there's some people who resent
American brands. I know there were some problems in the Middle East not that long ago. Yeah, certainly last year we had some challenges in that regard. But what you saw this quarter is a really nice recovery from that. KFC International, which is obviously the bellwether of an international business, put up a plus three on same store sales growth. We had a Ramadan timing issue, which negatively impacted us. You back that out and you back out China and we actually were up five in
So that's widespread growth. Every market that we track, all of our 10 business units internationally for KFC, all had positive system sales in the quarter. So you can see we're recovering from what happened last year. Consumers love our brands. They recognize that our businesses are all locally owned by local franchisees.
It's a great model where they're investing their capital. We're providing the scale of the system to help support them. And it all adds up for a win-win. You have explained to me the model and it is so beautiful. Now, I do notice you're doing some terrific work with NVIDIA, doing what NVIDIA told me might happen, where you could possibly have maybe drive through. They've made people who are actually kind of let's call them robots who can speak many different languages and can be very helpful.
Yeah, I'm really proud of the work the team's done with NVIDIA. In fact, I was in that initial meeting with NVIDIA over a year ago where we sat down and talked about our capabilities, and I saw their eyes get wide as they realized we have thousands of people working in tech, we have a vision for what we want to do in tech, we're the largest restaurant company by units in the world, and we rightfully should be the best when it comes to tech. We started to form a partnership with them, it's starting to pay dividends, but we've really just scratched the surface.
It's really fascinating, Jim. You talked about voice AI. We have voice AI now in over 500 Taco Bell drive-thrus. What we're finding is the employees in the store love it. Really? Turnover is down in those stores. We are getting less turnover.
because we've made their jobs more fun, easier. They're not having to worry about trying to do two things by taking cash from somebody at the drive-through window while they're also taking an order. They can focus on their tasks, they can give better hospitality to the customer, and it's actually obviously driving labor savings for us while at the same time improving the experience for the employee. It's really where the future is going.
technology living side by side with humans is the right equation well i think it's great credit to you that you're open-minded enough to do it some of the others i didn't want to look at they thought it might hurt the franchisees clearly not i do i can't i have to mention yes indeed that you are retiring i don't want you to do that and you know that uh you have been such a great explainer to me of how things work but we're still going to have you for a couple more quarters correct
Yeah, obviously we made this announcement well in advance of my retirement date in the first quarter of next year. And that was as everything we do, but to be very planful and thoughtful about it, give the board time to pick the right candidate and have the right transition. Look, it's never an easy decision to retire, as you know. I'm sure you're faced with lots of CEOs dealing with the same thing. You're going to keep humming along. But for me, when I took the job in 2019,
I set out with a couple of goals that I thought if we accomplished them, we could strengthen the business and accelerate our profit growth.
Digital was obviously one of them. Ramping up development, we're building a new store every other hour now somewhere in the world. And then obviously strengthening the brands, and you talked about it, Taco Bell plus nine this quarter, you saw that on display. Accomplishing those three things I thought could accelerate the model. That's why we took our guidance for operating profit up in 2022 to 8% annually, and we've delivered on it, and we reiterated today on the earnings call that we would deliver on it again this year, that we're on track.
So having accomplished all that, it just feels like the right time to hand it to the next person. Of course, you know, everything about Yum is about people and culture and the amazing talent we have in the organization. I am going to miss that, but it's also the thing that gives me tremendous confidence in the future of this company. I know we've got the best leaders in the world to take the business to new heights as I transition the business to the next leader. Well, I want to wish you the best of luck. You've done a terrific job. By the way, coming out with some great numbers today sure does help
That's David Gibbs, CEO of Yum! Brands. Thank you, David. Thank you for coming on the show. Thanks for having me on. May I be back after the break?
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Lately, we've heard so much hammering about the weakening dollar. We're told it's a sign that foreign investors have lost interest in America, lost faith in America. Something that means, well, we're very much headed in the wrong direction. As I've told you before, though, I think it's all crazy talk. There's a reason so many of our trading partners constantly try to weaken their currencies, not strengthen them. A weak dollar is true for American companies that do lots of business overseas, and we have a lot to do.
It makes their exports less expensive versus foreign merchandise. It also means that their foreign revenue translates to a greater number of dollars. A strong currency, on the other hand, makes it cheaper to buy stuff from overseas. And that's not what this White House is pushing for. And given the size of the now delayed reciprocal tariffs, a strong dollar won't help you if those truly go into effect.
So unlike most of the people on air, I love the weak dollar because it's great for the earnings of the big, moldy nationals. But unfortunately, the weak dollar might not be with us for long. Why not? Because Larry Williams, legendary technician, market historian, who's been the best in the business since I was still in grade school, says it's time to turn
bullish on the dollar. Larry's written over a dozen books. He's created a ton of proprietary technical index. We'll see him in a moment. He's also made some truly incredible calls in the last few years. His track record, frankly, is on a sale. So when he tells us that something's going to happen with the charts, we take him very seriously around here. And right now, when it comes to the dollar index, which measures the greenback versus a basket of foreign currencies, four of Larry's best long-term indicators are screaming that it's time for a currency crash.
rally. First, take a look at this chart. This is a chart of the dollar index. It shows the relationship between the dollar index and the price of gold down at the bottom. Very important relationship. The line down at the bottom shows you that when the dollar index has gotten undervalued or overvalued versus gold based on historic standards, you can expect something to happen. Right now, as Larry sees it, the dollar is incredibly undervalued.
in part because gold's had a huge run while our currency's been declining. Basically, gold and the dollar tend to trade in a given range relative to each other. Right now, we're at the bottom of that historical range. So if history's any guide, and usually it's a pretty darn good guide when we're talking about how currencies relate to precious metals, then Larry thinks the dollar's ready to roar in order to make up the valuation gap with gold. That kind of makes sense to me. If you look back over the last few years, you can see that whenever the dollar gets too undervalued,
versus gold, dollar index tends to rally. It's kind of cut and dried. Some of these rallies have been larger than others, but we almost always get a bounce here. Relationship will always hold true unless our government starts printing money like the Weimar
Germany Republic. That's it. Larry warns that this is not a timing tool. Sometimes this indicator can be early, meaning it could take a while between the moment when the dollar gets undervalued versus gold and the moment when the dollar starts bouncing. And shortly thinks the greenback's too cheap versus gold. Historically, that means we're probably headed for an eventual rebound. Eventual would be the key word there. But it could take months to play out.
Let's keep going. Next up, every week, the Commodity Futures Trading Commission, CFTC, releases its Commitments of Traders Report. That's a cot report. And this is some of the most useful investing information you'll ever get from the federal government. The Commitments of Traders Report tracks the size of the net long or short positions for futures traders. And it groups them by categories. Small speculators, meaning individual investors. Large speculators, meaning money managers. And then the commercial hedgers.
Larry likes to keep an eye on the commercial hedgers because these are usually the smartest players in the game. The ones who understand these markets best because they directly participate in them as part of their core business. So take a look at the weekly chart of the dollar with the CFTC's data on commercial hedgers down at the bottom. You almost never see the commercial hedgers holding a net long position.
Very strange in the dollar index futures, because remember, they're hedgers. Normally, they're just trying to hedge against their downside risk. They don't want to take an actual position. But when the commercials do end up that long, well, it's like they are right now, then you tend to have some explosive moves higher.
For example, commercial hedgers went net long in the fourth quarter of last year, right as the dollar turned into a rocket ship. OK, boom. You got that one right. The last time the commercial hedgers got extremely long in early 2021. OK, look at this. We back in there probably hard for more than a year. So when Larry sees this on the chart, you know, it tells him the dollar is ready to rebound.
Now, in Larry's view, the exact opposite of commercial hedgers are the newsletter writers and advisors. It's a little cynical here, but check out this chart of the dollar index with the Williams sentiment index down at the bottom. This is an index that was Larry Williams. He created one that was featured in the Bloomberg book, New Thinking and Technical Analysis, which is actually really good. It was published way back in 2000 and it's one of my Bibles.
It works the same way now, even a quarter century later, by tracking the opinions of advisers and newsletter writers. As Larry sees it, these guys are trend chasers by nature. Remember, you want to be ahead of the trend, not a chaser. They seem to be largely based recommendations on market direction. When prices rally, they say buy. When prices decline, they say sell or stay out.
As you can see, when the newsletter writers get very bullish, high levels in the chart to the dollar index. Well, guess what? Well, you know, the dollar index tends to top out when newsletters get excessively negative like right now.
Well, the dollar tends to rally. Basically looks to the newsletter writers and advisors as a counter trend, sign of trend exhaustion. Right now, they're very negative on the dollar, which gives Lauer one more reason to go positive. So when you look at the dollar index versus gold, the commercial hedgers data in the CFTC commitment of Trader's Report and the Williams Centerman Index, they're all screaming that the greenback's ready to rally. By the way, if that happens, don't expect anyone who's been making dire predictions about it.
ever acknowledge it. But Larry does think it's going to happen. And the final reason comes down to his trademark cycle analysis. That's what we really know Larry by. He's always looking for patterns to see him repeat themselves in action. So take a look at what he's found in the chart of the dollar index. The blue line
shows, it's very interesting, blue line shows projection for the dollar based on the dominant cycle that tends to last for 32 to 35 weeks before impeding itself. And when you look at that cycle forecast, it says the greenback is going to roar from now through about September.
Here's the bottom line of this incredibly contrary piece we're just doing here. The charges interpreted by Larry Williams suggest that you need to stop worrying about the weak dollar. Maybe start worrying about the dollar getting stronger again, because that's where he thinks it's headed. I certainly wouldn't bet against him. And can I just tell you, if this happens, it could affect a lot of different parts of the market, including the bear market that a lot of people feel we're in in equities. I want to speak to Robert in New York. Robert.
page and guys want to congratulate you on the twenty years of helping everybody it with the show was spectacular and so were you and your family beautiful family god bless you know i like that you know i had the best time part and thanks for inviting me on that show i just loved it it was a awesome
Awesome. I'm so glad you liked it. So good you liked it. How can I help you now? I'll get right down to business, Jim. Jim, let's talk about the stock that has gotten beat up since February when you said to me, don't go back in, Robert. Let it come down. It's still a good company, but you were right again. It was $80 at the time. You told me, not now. And it came down to $30 in April. Now it's at $50. They lost the exclusive with Walmart, but added some good business with JPMorgan Chase Payment Units.
Um, Lepkin is a genius, but should I go back in now? I have made enough money on this in the past with you. What should I do? Uh, I like it right here. I like it from very much. I think it's ready to roll. It's pulled back. It's gotten rid of the froth. I think you're in good shape. And I really want to thank you for those kind comments. That was terrific. Thank you. All right. People listening.
The charts are interpreted by Larry Williams. They suggest the recent weakness in the dollar, which everyone's just chattering about, has run its course. It might be time for the greenback to get stronger again. Very contrary view. Much more mad money ahead. Including my post earnings look at Logitech, how it's reacting to tariffs and the global manufacturing landscape. And this is fascinating because
It makes us a lot of stuff overseas. Hey, speaking of tariffs, I'm telling you where I stand on the latest from the White House and the toll it's taking on the American consumer. And, of course, all your calls rapid fire in tonight's edition of the Lightning Wrap. So stay with Kramer.
Right now, everybody's trying to cope with these tariffs, but some are doing it better than others. Take Logitech International. That's the consumer electronics company that makes all sorts of gadgets for gaming, as well as other computer peripherals, webcam speakers, keyboards. When the Liberation Day tariffs were announced four weeks ago, the stock got hurt. And about a week later, the company withdrew its full-year forecast, citing the uncertainty of the tariff environment. That makes sense to me. Last night, though, Logitech reported, and while the results were mixed, slight revenue missed paired with a solid earnings
Thank you.
Stock got hit today. It's down more than 3%. But you know what? I'm feeling pretty confident about the company's ability to mitigate the impact of the tariffs. Now, let's just focus on the products, which is what I'm interested in. Don't take it from me. Let's check in with Hanneke Faber. She is the CEO of Logitech International. For more, I'm Ms. Faber. Welcome back to Mad Money.
Thank you so much. And Jim, it's a delight to be back. Let me first congratulate you on 20 years of Matt Money. That is awesome. Thank you. It's been a good run. Thank you very much. Well, I know last night I listened to the analysts. Of course, they're all just they just ask tariff after tariff after tariff. So before I do that, I want to ask you, how do you see businesses away from tariffs?
Yeah. Well, we were so pleased to report a fabulous fiscal year 25 last night. So we just our fiscal ends on April 1st. So we just ended our fiscal. We grew sales 7 percent. We expanded gross margins 170 basis points and operating income margins 70 basis points, which is really an outstanding result. So we're really pleased with that. We also generate a lot of cash, more than one times operating income.
So a really great year for us, driven by a number of things. Great innovation, great products, as you always say. Also doubling down on our Logitech for business, business, as well as just great execution around the world. It's definitely a gross margin. Terrific. Now, let's let's deal with the issue of China manufacturing. I was very impressed how, you know, you're going to have to pivot, but you can pivot much faster than anyone on the conference call said. How are you able to do that?
Yeah, we're really built for this, Jim. We've been preparing for this for many years. So before the pandemic, we only basically manufactured in China. Today, we manufacture in six countries. We're up and running in all six. We can make lots of products in all six markets. So that really is a benefit to us. And to put the tariffs into perspective, one third of our business is in the U.S. Two thirds of our business are globally.
And for the products that come into the U.S. today, only 40 percent is from China. And by the end of this calendar year, as you said, we expect that only 10 percent will come from China. So will any of your manufacturing ever come to the United States?
We're always looking at where we manufacture things. And we look at things like, is the supplier ecosystem there? Will the labor be there? What will the cost be? But we're always looking at what's next, as evidenced by the fact that we're now in six countries.
Absolutely. I mean, I talked with Peter Navarro today. He's the senior counsel for trade and influential with President Trump. And he was saying that it's better, faster, easier to do it now than ever. And that people should take a look at us because we're going to make it happen if you want it. Will you do that? Will you take a look at America as a place to be able to actually build a new place?
Yeah. As I said, we're constantly looking at what's the best place and we're considering all the markets that we're in. OK. Now, for part of tariff mitigation, I know you're putting through targeted price increases. Can you give us a sense what a targeted price increase means? Because I find your stuff is always representing great value. If I suddenly saw it much higher than another version, I might not I might not buy it as I usually do.
Yeah. So we never like to increase prices. Let me say that first. But in this case, we felt it was the responsible thing to do. And when we say targeted price increases, that means we really were surgical. We looked at it product by product by product. Some of our products, we didn't take any pricing. Some of our product, we took double-digit pricing. Most of them, somewhere in between. And that's based on their current price point, the role of that product in the portfolio.
And we believe there may be some short-term impact of that, but in the long term, our brand and our superior products will protect us. I buy your stuff on Amazon, candidly, and I look at everybody else's, and I know yours is high quality. So if I see it at a high quality at a lower price, of course I'm going to buy it. When your prices pop now, will be some of these targeted ones, they will look on Amazon, and I won't think it's necessarily below or cheaper than others, even though I know the quality is superior.
Yeah. Again, as we looked at these targeted price increases, we obviously looked at competition as well and what we expect them to do. And honestly, again, Jim, we are built to compete at a time like this. The flexibility that our supply chain have, the fact that we make in six countries already that we're able to move stuff around really quickly, that's
that we can deliver cost savings as we go. We had record product cost savings last year. I think that puts us in a really good place also when it comes to pricing. All right, let me ask you one last question. Grand Theft Auto, the new edition, is going to come out this year. I've seen Take-Two. Their stock go up 80 points, literally 80 points since they announced it. It is the biggest event in gaming. Will there be a surge just because of one game that is so popular that hasn't had a refresh in many years?
Yeah, now that's going to be a huge event for gaming as a whole. I mean, I speak to gaming consumers all the time and some of them are telling me, "Oh, I'm going to take a month off when GTA 6 comes out just to play the game."
But our business is not dependent on one game. We are obviously excited, but, you know, there was no GTA 6 in the last fiscal year, but our gaming business was up 10% last fiscal year. And even in Q4, market share in the United States in gaming for us was up 4 percentage points, which is huge.
And we had double digit growth in China as well. So we're very bullish on gaming with or without GTA 6. But GTA 6 is a fun thing coming. All right. Terrific. Thank you so much. Congratulations on the strong, important and on the mitigation. I think you're mitigating better than most of the companies I deal with. That's Hanukkah Faber. She's the CEO of Logitech. And thank you for the kind words about our 20th. Good to see you. Thank you. May I have buddies back here for the break?
Coming up, Kramer takes your calls. And the sky's the limit. It's a fast-fire lightning round. Next. It is time. We start with the lightning round. We start with Michael in Tennessee. Michael.
Congratulations on 20 years, Jim. Thank you. What's up? And here's to another 20 years. I hope so. If I can pull it off, I will. What's going on?
Given this company's recent earnings myth and the rise in medical costs impacting its bottom line, do you believe the stock's current valuation presents a buying opportunity, or are there underlying issues that the investors should be cautious about? The company at United Health Group.
Okay, it's going to be under pressure for some time because a lot of companies really, a lot of big pension funds and mutual fund managers thought everything was perfect. But I am going to say today at $400, I would indeed start a position. I've been very negative on UnitedHealth from 630 down to this caller right here. I would start a position at $400. That's a big change for me. Let's go to Barry in Connecticut. Barry.
Hey, Jim. A big bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-bo-
Yes. We're all little, except for the billionaire guys who come on and tell us that we should not invest a dime because we're supposed to stay poor and they're allowed to be rich. It's an interesting country. It's a kleptocracy from that extent. Not an oligarchy. It's a kleptocracy. So go ahead. Tell me.
Tell me, what can I help you? I got a company. It's a long-term holding that you recommended several years ago. And the company embraces 150 years of American tradition. However, I'm playing with the house's money right now. But in the past year, it's missed two of the three earnings per share estimates. And it's increased its debt to finance some new business development. And the stock price is down about 30% over the past year. And what stock would that be?
That would be for the Kentucky Derby, Churchill Downs. Oh, you know what? That's kind of... Hey, it's a one-trick pony! I'm not a fan, but I am a fan of yours. Let's go to Dean in Texas, please. Dean.
Booyah, Jim. Congrats on 20 years. I'm going to get right to the question. You're welcome. It's regarding Supermicro. I'm sick of Supermicro. It's the not-so-Supermicro. If you want to be in that space, let's just go by Dell. And I've got to tell you, can I just say that if anyone's going to keep on picking Nvidia, I live right here. Come get me. Okay? Me and Jensen. All right. And that, ladies and gentlemen, is the conclusion of the lightning round!
The Lightning Round is sponsored by Charles Schwab. Coming up, as tariffs take a toll on the averages, Kramer is revealing what it'll take to come out the other side of the volatility in better shape than before. Next.
It's not enough for the White House to say that things will be better than ever, that our country will emerge stronger after we sort out the new tariff regime and start raking in cash from our trading partners. We need them to spell out what they actually want to accomplish, because if we don't know the goals, how the heck can we know if we're making any progress? And I do believe we can make a ton of progress, but it needs to be defined. We need goals to be set. We need to know what we're doing and why.
Some days I think they're trying to create new jobs with tariffs. Some days it sounds like they want the tariffs to raise a lot of money to fund tax cuts. Other days we're trying to change the ways of bad actors whipping our trading partners into shape with high tariffs. Those are all withdrawal aims. But right now we're in the pain moment that the president and his team stressed would happen. They told us to get ready for hurt, and it's now here. Yet the people simply don't understand why they're beginning to take pain to begin with. The House of Pay.
We're seeing weaker hiring data. Soon we both, we all know we're going to see higher prices at the stores. That's an inevitable consequence of high sales taxes on imports, also known as tariffs. No one disagrees that's going to happen. No one. Okay. So we know that the tariffs can't all be eaten by the suppliers. Will consumers rebel? Will they push the Republican representatives to challenge the president? The Republicans are the ones who control Congress. So they're the ones who will be on the firing line.
I care about this for several reasons. First, I'm not a free trader at heart, so it pains me to see the way this has been rolled out. I favor tariffs in certain situations, like when companies dump government-subsidized steel on our markets to wipe out our American steelmakers. You heard Nucor last night. They couldn't expand, build plants, hire people, put food on the table, give people health care if Chinese kept
dump in on us. I favor high tariffs on Chinese goods done in a staged way so that American companies know to leave China and go make things elsewhere over time. I don't want our companies to be hurt. It did nothing wrong. It's not their fault that China became more militant or that it never played fair on trade. Our government was fine with all this outsourcing for decades. Get these superb American companies time to get out.
I favor a coalition willing to stop China from dumping states or subsidized goods on other countries, not just us, which means making nice with the rest of our trading partners circling China so it doesn't wreck the world's economies once it's defeated here. But I don't favor ham-handed tariffs with no explanations, nothing grandiose promises because we're going to be a great country.
China, that can take pain more than we can, is someone who we have to worry about, especially when the average American doesn't understand why they have to take pain at all. The consumer's working. She makes enough money to shop at Walmart. She's confused. She didn't sign up for this. Most people in America don't care about China or any other country, really. And I shop at Walmart, so I'm not being particular. It's pretty good, actually.
So it's time for the White House to lay out a coherent policy, not one-off deals or promises of new car plants with no car names connected to them or a return of imaginary factories. Are we really going to punish great American companies like Nvidia, like Apple, that played by the rules that are now being eviscerated for it?
Is our goal to change the way China does business? Because as far as I can see, China's really the only country that's more than just a trade offender. And by cracking down on them, we have to accept that prices for all sorts of goods will go much higher. And the American people have to be told why they have to suffer through another bout of inflation. Listen, I'm someone who's inclined to be sympathetic to the president's trade agenda. I'm pro-fair trade, not pro-free trade.
I'm sympathetic to tariffs. And even I'm confused about what the heck we're trying to do here. I can only wonder about what the average American is thinking. I can tell you two things that the American people are thinking. One, this is Trump's stock market, not Biden's. And two, why the heck did I, what did I do to have such higher prices? The people like the companies did no wrong. The people like the companies deserve proper, clear, and constructive explanations about why we're doing this tariff thing to begin with.
I like to say there's always a bull market somewhere, and I promise you I'll find it just for you, right here on MadMoney. I'm Jim Cramer. See you tomorrow.
You should not treat any opinion expressed by Jim Cramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Cramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Mad Money Disclaimer, please visit cnbc.com forward slash madmoneydisclaimer.
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