Latest / What the Flux / Westpac's profit dip | Google's 20 decillion fine | Peloton goes up a gear... or three

Transcript

Westpac's profit dip | Google's 20 decillion fine | Peloton goes up a gear... or three · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm Brett and I'm justin As Wednesday, the sixth of November.
• 0:09
  Speaker 1: Juzzy boy. Optus have been through the PR wars over
• 0:13
  Speaker 1: the past couple of years, between major outages and cyber attacks.
• 0:16
  Speaker 1: You think it was all over now, but the age
• 0:18
  Speaker 1: riple see is still coming for Optus. It's taken Optus
• 0:23
  Speaker 1: to court for exploiting hundreds of vulnerable people by pushing
• 0:26
  Speaker 1: sales of phones and internet services even when OPTAs had
• 0:29
  Speaker 1: no coverage in the.
• 0:30
  Speaker 2: Area of this has really got to do something about
• 0:32
  Speaker 2: his PR here man, Uh huh. But Sam, As we
• 0:34
  Speaker 2: tick over to the new month of November, it means
• 0:36
  Speaker 2: a brand new chance to check your credit score and
• 0:38
  Speaker 2: see if it's gone up, if it's gone down. We've
• 0:40
  Speaker 2: got it all covered in the Flux app, including what's
• 0:42
  Speaker 2: impacting your score they shot it. Download the app and
• 0:44
  Speaker 2: check out your credit score to kick off.
• 0:46
  Speaker 1: November, three meaningful stories today, juzzy boy, Let's do it
• 0:49
  Speaker 1: for our first. Westpac has announced an annual profit of
• 0:53
  Speaker 1: seven billion dollars, which is actually a three percent drop
• 0:56
  Speaker 1: from last year. As mortgage competition ramps up.
• 1:00
  Speaker 2: To me like mortgage repayment pressure is ramped up, b Man.
• 1:02
  Speaker 2: So what is the story here?
• 1:04
  Speaker 1: Well, Jussie boy, we know Westpac once known as the
• 1:07
  Speaker 1: Bank of New South Wales a long time ago. It's
• 1:09
  Speaker 1: the third largest lender in all of Australia by market value,
• 1:12
  Speaker 1: and Westpac is constantly jostling with the other big banks
• 1:15
  Speaker 1: for new retail and business banking customers.
• 1:18
  Speaker 2: And now b Man. Westpax announced a net profit of
• 1:20
  Speaker 2: seven billion bukkaroonies for the past twelve months.
• 1:23
  Speaker 1: Which is actually a three percent drop this year compared
• 1:25
  Speaker 1: to last year.
• 1:25
  Speaker 2: And be man, the biggest drop in earnings came from
• 1:27
  Speaker 2: Westpac's consumer division. Yes, Jusi boy.
• 1:30
  Speaker 1: Westpac said that its revenue actually went down six percent
• 1:33
  Speaker 1: thanks to tough mortgage competition.
• 1:35
  Speaker 2: And its net interest margin fell to one point ninety
• 1:37
  Speaker 2: six percent.
• 1:38
  Speaker 1: Now do boyd? Despite weaker results for old Westpac, it's
• 1:40
  Speaker 1: crossing its fingers and toes that loan demand will jump.
• 1:44
  Speaker 2: And even though the RBA paused the cash rate yesterday,
• 1:46
  Speaker 2: they're hoping the RBA will start to lower the cash
• 1:48
  Speaker 2: rate in the coming months.
• 1:50
  Speaker 1: Wow, So what is the key learning here?
• 1:51
  Speaker 2: When the Reserve Bank changes its cash rate, the banks
• 1:53
  Speaker 2: will follow suit.
• 1:55
  Speaker 1: Most of the time you see Jusi boy. The cash
• 1:56
  Speaker 1: rate is the interest rate that banks pay to borrow
• 1:59
  Speaker 1: money from other banks.
• 2:00
  Speaker 2: So when the cost of borrowing goes up, the banks
• 2:02
  Speaker 2: like Westpac, they pass on that cost jump to consumers.
• 2:04
  Speaker 1: Yep. In twenty twenty three, the RBA up the cash
• 2:06
  Speaker 1: rate by zero point two five percent. In feb and
• 2:09
  Speaker 1: March and May and June and November and be.
• 2:11
  Speaker 2: Man, all four big banks increase the interest rate to
• 2:14
  Speaker 2: borrows by the same amount in the same months.
• 2:16
  Speaker 1: Now, Josey woy Oussie homeowners holding their very breadths for
• 2:20
  Speaker 1: the RBA to cut the cash rate early next year.
• 2:22
  Speaker 2: And they're holding their very breaths even more for the
• 2:25
  Speaker 2: banks to follow the RBA and give homeowners a little
• 2:27
  Speaker 2: bit of mortgage relief.
• 2:28
  Speaker 1: But of course, there's no guarantee that when the RBA
• 2:31
  Speaker 1: finally does cut the cash rate, the banks like Westpac
• 2:33
  Speaker 1: will actually mirror that move.
• 2:35
  Speaker 2: In fact, be Man back in twenty twenty when the
• 2:37
  Speaker 2: RBA dropped the cash rate from point five percent to
• 2:39
  Speaker 2: point one percent between March and November, the average variable
• 2:42
  Speaker 2: rate for homelans stayed at four point five two percent.
• 2:45
  Speaker 1: So we'll have to wait and see if once the
• 2:47
  Speaker 1: RBA starts reducing rates, the banks actually follow suit.
• 2:50
  Speaker 2: For our second story, Google has been fined two undercillion
• 2:54
  Speaker 2: rubles or twenty bacillion US dollars by a Russian court
• 2:58
  Speaker 2: after blocking Rush state media channels on YouTube.
• 3:01
  Speaker 1: Suddenly my ninety two dollar parking fine is put into perspective.
• 3:05
  Speaker 1: Boyfair to say, So, what's going on here?
• 3:07
  Speaker 2: Okay? So, back in March twenty twenty two, Google stopped
• 3:09
  Speaker 2: serving ads to use in Russia that believe was exploiting
• 3:13
  Speaker 2: Russia's war in Ukraine.
• 3:14
  Speaker 1: Indeed, Google blocked more than one thousand YouTube channels in
• 3:17
  Speaker 1: over five and a half million videos.
• 3:19
  Speaker 2: And now Russia has come back and find Google twenty
• 3:22
  Speaker 2: decillion US dollars.
• 3:24
  Speaker 1: But here's the thing, Jazzy boy, twenty dacillion US dollars
• 3:26
  Speaker 1: is more money than there is in the entire world.
• 3:29
  Speaker 1: But if Google does not pay the fine in the
• 3:31
  Speaker 1: next two hundred ninety one weeks, then the penalties will
• 3:33
  Speaker 1: increase to one Google.
• 3:36
  Speaker 2: Which is oh one, followed by one hundred zeros.
• 3:39
  Speaker 1: And z boys. Pretty obviously, Google couldn't even pay this
• 3:42
  Speaker 1: fine if they tried, But Russia's hoping that this fine
• 3:44
  Speaker 1: so big you can't even pronounce it will push Google
• 3:47
  Speaker 1: to lift destrictions on these channels.
• 3:50
  Speaker 2: So what is the key learning here?
• 3:51
  Speaker 1: Global tech giants and national governments can often find themselves
• 3:55
  Speaker 1: in a complex power struggle.
• 3:57
  Speaker 2: Yeah. On the one hand, countries recognize that big tech
• 3:59
  Speaker 2: that ribe innovation and provide jobs, and.
• 4:01
  Speaker 1: They contribute to their economies and sometimes they even paid
• 4:04
  Speaker 1: tax donavoy. Many governments are also looking for greater control
• 4:08
  Speaker 1: over big tech company. So the first time we've seen
• 4:11
  Speaker 1: battles between big tech and governments around the world. Well,
• 4:13
  Speaker 1: there was and still is the media bargaining battle between
• 4:16
  Speaker 1: Meta and the Australian government and media.
• 4:18
  Speaker 2: There was and still is the battle between TikTok and
• 4:21
  Speaker 2: the US government and whether it will be banned in
• 4:23
  Speaker 2: the US.
• 4:24
  Speaker 1: And then of course there's Russia's twenty Decilian fine of Google.
• 4:28
  Speaker 2: But man, it's pretty clear that Google has been wary
• 4:30
  Speaker 2: of operating in Russia for quite a few years now.
• 4:32
  Speaker 1: Yep. In twenty twenty one, Google made around one point
• 4:34
  Speaker 1: three billion US dollars in Russia, but.
• 4:36
  Speaker 2: In twenty twenty two it may just two hundred and
• 4:38
  Speaker 2: forty five million US dollars. So, b man, all this
• 4:40
  Speaker 2: fine could technically bankrupt Google, it doesn't seem like investors
• 4:43
  Speaker 2: are too concerned about them actually coughing it up.
• 4:46
  Speaker 1: For our third and final story, Peloton, the connected fitness company,
• 4:50
  Speaker 1: has seen a chair speed up twenty two percent after
• 4:53
  Speaker 1: its first quarter results smashed expectations thanks to a pretty
• 4:56
  Speaker 1: key pivot talking.
• 4:57
  Speaker 2: About going up a gear or three for Peloton. Be man,
• 5:00
  Speaker 2: so tell me what's going on.
• 5:01
  Speaker 1: Peloton is the fitness company known for that super fancy
• 5:04
  Speaker 1: exercise bike and.
• 5:05
  Speaker 2: Then it's super fancy treadmill.
• 5:07
  Speaker 1: Started way back in twenty twelve with a two hundred
• 5:10
  Speaker 1: and fifty thousand dollars Kickstarter campaign.
• 5:12
  Speaker 2: But Beman, it was during COVID when Peloton really made
• 5:15
  Speaker 2: a name for itself.
• 5:16
  Speaker 1: Yeah, Peloton was absolutely booming. Its market valuation jumped to
• 5:20
  Speaker 1: just under fifty billion US dollars, were all completely.
• 5:24
  Speaker 2: Nuts, and it became the at home bike of slabs
• 5:26
  Speaker 2: like Lizzo, Roger Federer, even mister Worldwide Pitbull.
• 5:29
  Speaker 1: Then vaccines hit the world and Peloton came hurtling back
• 5:32
  Speaker 1: down to earth.
• 5:33
  Speaker 2: Yep the bee Man. After struggling for the past few years,
• 5:35
  Speaker 2: Peloton could be gearing up for another comeback.
• 5:38
  Speaker 1: Yep, It's results exceeded guidance on all metrics. We're talking profitability,
• 5:42
  Speaker 1: we're talking growth, and it reduced its ad spend as well.
• 5:45
  Speaker 2: And be man, that's largely because Peloton pivoted like a
• 5:47
  Speaker 2: pro cyclist.
• 5:48
  Speaker 1: And now it's mainly focused on selling the subscriptions.
• 5:51
  Speaker 2: So what is the key learning here?
• 5:52
  Speaker 1: When you own the supply chain from end to end,
• 5:54
  Speaker 1: you stand to gain the most, but you also stand
• 5:57
  Speaker 1: to lose the most.
• 5:57
  Speaker 2: You see, be man. When Peloton launched, factured all of
• 6:00
  Speaker 2: its bikes and its treadmills in the US of A.
• 6:03
  Speaker 1: On top of that, the company also produced all of
• 6:05
  Speaker 1: its own content and its app, and it sold all
• 6:07
  Speaker 1: of its.
• 6:07
  Speaker 2: Own products directly through its website and nowhere else.
• 6:10
  Speaker 1: But doze boy. That meant that when times are good,
• 6:12
  Speaker 1: Peloton was peddling to glory.
• 6:14
  Speaker 2: When things got tough, they were left with over one
• 6:16
  Speaker 2: point four billion dollars worth of unsold bikes and treadmills.
• 6:19
  Speaker 1: That's a lot more than nineteen million dollars they were
• 6:21
  Speaker 1: sitting on just two years ago. Talk about a bumpy right,
• 6:24
  Speaker 1: So boy, Peloton has de risked his business by outsourcing
• 6:27
  Speaker 1: its production to Taiwan.
• 6:28
  Speaker 2: And outsource its distribution by selling through Amazon and.
• 6:31
  Speaker 1: Costco, and now it's focusing on nailing its subscription offering
• 6:34
  Speaker 1: plucks down. Did you know if you changed your electricity,
• 6:36
  Speaker 1: your gas, or even your phone fields that could impact
• 6:39
  Speaker 1: your credit score the micro app at microcown and so
• 6:41
  Speaker 1: many changes can happen each and every month. That's why
• 6:43
  Speaker 1: we've got the Flux Credit Score feature where you can
• 6:45
  Speaker 1: check what's happened in the last month, and it's all
• 6:47
  Speaker 1: within the nifty Flux app, So make sure to download
• 6:50
  Speaker 1: the app and check out your.
• 6:51
  Speaker 2: Credit score for the month of November.
• 6:52
  Speaker 1: Thanks for listening and we'll see you on Friday.