Latest / What the Flux / Optus' unconscionable conduct costs millions | Smiggle's sales plummet | Alibaba goes all in on AI

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Optus' unconscionable conduct costs millions | Smiggle's sales plummet | Alibaba goes all in on AI · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm Brett and I'm Justin and it's Monday, the twenty
• 0:08
  Speaker 2: ninth to September.
• 0:09
  Speaker 1: Josey Boy. Instagram has hit the big leagues. I'm talking
• 0:13
  Speaker 1: three billion monthly users that my friend is nearly half
• 0:17
  Speaker 1: the planet. Doom's calling and sending each other memes about work,
• 0:20
  Speaker 1: that they're avoiding.
• 0:21
  Speaker 2: A lot of people wasting their time. Be man, uh
• 0:23
  Speaker 2: huh flex Amm. We went to the Networth Accelerate Summit
• 0:26
  Speaker 2: a couple of weeks ago and asked advisors some of
• 0:28
  Speaker 2: their biggest money myths and we had some great answers
• 0:31
  Speaker 2: that are all captured in the Flux apps. If you
• 0:33
  Speaker 2: want to learn some of the biggest money myths from
• 0:34
  Speaker 2: some of the biggest financial advisors in Australia, make sure
• 0:37
  Speaker 2: to download the Flux app and check out our Asking
• 0:39
  Speaker 2: Advisor videos.
• 0:40
  Speaker 1: Three splendid stories today, Juzzy Boy, let's do it for
• 0:44
  Speaker 1: our first. Optus has been slapped with a big, big
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  Speaker 1: fine for four years of unethical sales conduct.
• 0:50
  Speaker 2: Another fine for optis b man, tell me what is
• 0:53
  Speaker 2: going on down at Olan?
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  Speaker 1: Yeah? Well, Optus was founded back in nineteen ninety two.
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  Speaker 1: Is Australia's second largest telco company and his big coming
• 1:00
  Speaker 1: the fine capital of Australia.
• 1:02
  Speaker 2: We're talking more than ten million Aussies who use Optis
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  Speaker 2: for phone and internet coverage and Jauziboy. Since twenty eleven,
• 1:08
  Speaker 2: Optus has been owned by the Singaporean behemoth Singtel. But
• 1:12
  Speaker 2: over the last couple of years, Optus has developed a
• 1:14
  Speaker 2: bit of a reputation problem.
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  Speaker 1: First the mega cyber attack that leaked almost ten million
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  Speaker 1: customer details.
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  Speaker 2: Then a nationwide outage that left people unable to call
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  Speaker 2: Triple zero.
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  Speaker 1: And now the a Triple C has slapped Optus with
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  Speaker 1: a one hundred million dollar fine for another issue, yeap.
• 1:28
  Speaker 2: Optus has admitted to inappropriate sales practices between twenty nineteen
• 1:32
  Speaker 2: and twenty twenty three that affected hundreds of vulnerable customers.
• 1:35
  Speaker 1: We're talking questionable debt collection practices.
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  Speaker 2: We're talking misleading and deceptive conduct.
• 1:40
  Speaker 1: Yes, we're talking failing to explain the terms and conditions
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  Speaker 1: of contracts.
• 1:43
  Speaker 2: And failing to conduct coverage checks.
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  Speaker 1: Now, Jazzi boy. In some cases, people were even sold
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  Speaker 1: plans when they lived in areas where Optus reception was
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  Speaker 1: not available.
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  Speaker 2: Wow, So it's no wonder the a Triple C slapped
• 1:54
  Speaker 2: Optus with a big fine and he's now questioning whether
• 1:57
  Speaker 2: Optis deserves its golden ticket, its carrier license.
• 2:00
  Speaker 1: Ooh, you went there, jazzy boy. So what is the
• 2:01
  Speaker 1: key learning here?
• 2:02
  Speaker 2: A telco carrier license is a legal permit that allows
• 2:05
  Speaker 2: companies like OPTAs to build and operate telco networks across Australia.
• 2:09
  Speaker 1: Currently, less than ten percent of Australian telcos have this license,
• 2:12
  Speaker 1: which gives opter some serious market power. But having this
• 2:15
  Speaker 1: license comes with responsibilities.
• 2:17
  Speaker 2: Like providing safe and reliable services, protecting customer data, supporting
• 2:21
  Speaker 2: emergency calls, and of course treating consumers fairly as well.
• 2:24
  Speaker 1: And it's pretty clear to see that Optus has been
• 2:27
  Speaker 1: falling short of these responsibilities recently.
• 2:29
  Speaker 2: And be Man, in the past we've seen companies lose
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  Speaker 2: their licenses, like when The Star had its casino license
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  Speaker 2: suspended by the New South Wales Independent Casino Commission, and
• 2:37
  Speaker 2: this was.
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  Speaker 1: A very heavy blow to their operations, their reputation, investor confidence.
• 2:41
  Speaker 2: So be Man, Optus having their carrier license put to
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  Speaker 2: question is pretty serious business.
• 2:45
  Speaker 1: And you can bet your bottom dollar they won't be
• 2:47
  Speaker 1: taking this license for granted for much longer for.
• 2:50
  Speaker 2: Our second story, Premier Investments has booked a juicy profit boost.
• 2:54
  Speaker 2: But if you peel back the layers, the numbers are
• 2:56
  Speaker 2: looking a little bit more sketchy.
• 2:58
  Speaker 1: Kids just aren't digging Smiggle anymore? Is that right? What
• 3:01
  Speaker 1: is going on here?
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  Speaker 2: So? Premier Investments is the retail parent company behind brands
• 3:05
  Speaker 2: like Peter Alexander and Smiggle.
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  Speaker 1: Previously owned brands like Dotty Portman's JJ's.
• 3:10
  Speaker 2: Until they bundle them up and sold them as appol
• 3:12
  Speaker 2: brands to Mya for nearly nine hundred million bucks in shares.
• 3:15
  Speaker 1: And now Juzzy Boy. Premier has announced a full year
• 3:17
  Speaker 1: profit jump of thirty one percent two three hundred and
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  Speaker 1: thirty eight million bucks.
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  Speaker 2: Sounds pretty good if you asked, maybe, man, it does.
• 3:23
  Speaker 1: But before you pop the smell confetti Juzzy Boy, there's
• 3:26
  Speaker 1: a fair bit of pain under the covers here.
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  Speaker 2: You see, excluding the sale of apparel brands, Premier's profit
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  Speaker 2: from its continuing businesses actually fell twenty two and a half.
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  Speaker 1: Percent, down to one hundred and forty four mil, including
• 3:36
  Speaker 1: Sniggle sales, which dropped nearly eleven percent. The winners were
• 3:39
  Speaker 1: Peter Alexander and Premier steak in Brevel, but jusey boy,
• 3:42
  Speaker 1: that still wasn't enough to boost their underlying earnings.
• 3:45
  Speaker 2: So true, So what is the key learning here?
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  Speaker 1: When analyzing company results, it's crucial to separate one off
• 3:50
  Speaker 1: gains from recurring earnings.
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  Speaker 2: One off gains can come from selling assets or restructuring
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  Speaker 2: or revaluing their investments.
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  Speaker 1: They give profits a short term boost, but don't tell
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  Speaker 1: you how much the company's ability to generate income year
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  Speaker 1: after year has changed. In Premier's case, the sale to
• 4:05
  Speaker 1: Maya gave them a big one time sugar hit.
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  Speaker 2: And that pushed their statutory profit high.
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  Speaker 1: But underneath Smiggles losing it, Sparkle and.
• 4:12
  Speaker 2: Peter Alexander can't carry this whole sleepover.
• 4:14
  Speaker 1: This is why analysts often look at two sets of results.
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  Speaker 2: Statutory profit, which is the official figure including one offs.
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  Speaker 1: And underlying profit, which is adjusted to reflect core operations.
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  Speaker 2: Because at the end of the day, it's not about
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  Speaker 2: the one off windfalls.
• 4:26
  Speaker 1: Now, it's about whether your slippers and notepads can keep
• 4:29
  Speaker 1: ringing the till year in, year out.
• 4:32
  Speaker 2: For our third and final story, Ali Baba's share price
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  Speaker 2: rocketed eight percent higher after it promises to invest even
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  Speaker 2: more billions into AI.
• 4:40
  Speaker 1: Ali Baba comes out with all guns are blazon and
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  Speaker 1: investors are digging it. Tell me more.
• 4:45
  Speaker 2: Ali Baba launched in China in nineteen ninety nine and
• 4:47
  Speaker 2: has grown into a four hundred billion US dollar behemoth.
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  Speaker 1: It's got Ali Baba dot Com, AliExpress, Ali Baba Cloud,
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  Speaker 1: Chinese online shopping website, Tawboo gaming platforms, what else, jesse
• 4:57
  Speaker 1: Boy long form video platforms.
• 4:58
  Speaker 2: They've even got a logistics business as far as I know, yep.
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  Speaker 2: It's often called the Amazon of China.
• 5:03
  Speaker 1: That's because both companies started off as e commerce platforms
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  Speaker 1: but evolved into much much bigger technology companies.
• 5:10
  Speaker 2: And now Ali Baba CEO announced they'll expand its fifty
• 5:13
  Speaker 2: three billion US dollar AI investment.
• 5:15
  Speaker 1: Plan, make it rain Ali Baba and.
• 5:18
  Speaker 2: To show they weren't kidding b Man, Ali Baba also
• 5:20
  Speaker 2: announced a key partnership with Nvidia.
• 5:22
  Speaker 1: What is AI without an Nvidia partnership?
• 5:24
  Speaker 2: What is it true? Check? On top of that, Ali
• 5:26
  Speaker 2: Baba launched its most powerful AI model yet Now.
• 5:29
  Speaker 1: Clearly investors like this feisty and aggressive side of Ali
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  Speaker 1: Baba investing heavily into capital expenditure.
• 5:36
  Speaker 2: Share price jumped eight percent off the back of this
• 5:38
  Speaker 2: big announcement.
• 5:39
  Speaker 1: Yeah, so what is the key learning here?
• 5:40
  Speaker 2: Capital expenditure or CAPEX and operating expenditure OPX are two
• 5:44
  Speaker 2: very different ways for a company to invest in their future.
• 5:47
  Speaker 1: One build your empire, the other keeps the lights on.
• 5:49
  Speaker 2: CAPEX refers to big one of investments in physical or
• 5:53
  Speaker 2: digital infrastructure.
• 5:54
  Speaker 1: Think data centers or servers, or building proprietary AI models.
• 5:58
  Speaker 2: OPEX on the other hand, that cover what's the ongoing
• 6:00
  Speaker 2: costs of running the business.
• 6:02
  Speaker 1: You know, keeping the lights on, Think salaries to grant,
• 6:04
  Speaker 1: think electricity.
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  Speaker 2: And for big tech companies be then big CAPEX budgets
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  Speaker 2: have become crucial to scaling the AI capability.
• 6:11
  Speaker 1: In fact, Amazon, Google, Microsoft, Meta, they all have plans
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  Speaker 1: to spend a combined at three hundred and sixty four
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  Speaker 1: billion US dollars on AI and that's just for twenty
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  Speaker 1: twenty five alone.
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  Speaker 2: All part of their plan to gain dominance over each
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  Speaker 2: other in the AI gold rush.
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  Speaker 1: For these upfront costs can weigh heavily on profitability, especially
• 6:28
  Speaker 1: when the payoff may take years.
• 6:29
  Speaker 2: But right now b Man investors believe that AI spending
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  Speaker 2: is crucial to the survival of tech.
• 6:34
  Speaker 1: Companies and clearly investors like the ambition of Ali Baba
• 6:38
  Speaker 1: be Man.
• 6:38
  Speaker 2: You want to learn more about some of the biggest
• 6:40
  Speaker 2: money myths in Australia from some of the top financial
• 6:43
  Speaker 2: advisor in Australia, make sure to download the Flux app
• 6:45
  Speaker 2: and check out our Asking Advisor series.
• 6:47
  Speaker 1: Thanks for listening and we'll see you on Wednesday.