Latest / What the Flux / Telstra’s buyback spree | Westpac’s profits jump 14%| Perplexity's big bid for Google's Chrome

Transcript

Telstra’s buyback spree | Westpac’s profits jump 14%| Perplexity's big bid for Google's Chrome · What the Flux

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  Speaker 1: This is what the Flux. I'm Brett and I'm justin
• 0:08
  Speaker 1: and it's Friday, the fifteenth of August. Does the boy.
• 0:10
  Speaker 1: Apple is entering into your home in a whole new way.
• 0:13
  Speaker 1: We're talking security cameras, smart displays, and even tabletop robots.
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  Speaker 1: Whatever that means about time yep. Apple has traditionally left
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  Speaker 1: this to the likes of Google Home and Amazon's Alexa,
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  Speaker 1: but now it plans to have some of these features
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  Speaker 1: live in the next twelve months, all part of an
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  Speaker 1: effort to restore Apple's and mojue, and it seems to
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  Speaker 1: be working, as it saw a jump in its share price.
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  Speaker 1: Cn't wait for that robot me dox am. One of
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  Speaker 1: the biggest pieces of feedback we get from the Flux
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  Speaker 1: community is how hard it is to track all of
• 0:41
  Speaker 1: your spending that goes in, that goes out, and that's
• 0:43
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• 0:45
  Speaker 1: of that, we've just released an article about how tracking
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• 0:50
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• 0:53
  Speaker 1: Three Magnificent stories Today jusy boy, let's do it for
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  Speaker 1: our first Telstra has seen its annual net profit jump
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  Speaker 1: thirty one percent if you don't mind off the back
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  Speaker 1: of growth in its mobile services and now it's on
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  Speaker 1: a buy back or rampage. Must be the new animated
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  Speaker 1: ad with that long limbed guy walking be man, what
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  Speaker 1: I'm talking about? I do? Tell me more well. Telstra
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  Speaker 1: is Australia's biggest telco, founded in nineteen seventy five and
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  Speaker 1: still dominates the market for mobile services despite us all
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  Speaker 1: threatening to switch to opt Us every single time there's
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  Speaker 1: a price hike. Fun fact, Telstra once owned the Yellow
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  Speaker 1: Pages directory before we all started googling everything. Not happy jam,
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  Speaker 1: but Jazzi Boyd Telstra's investors were a much happier jam
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  Speaker 1: because it reported a two point three four billion dollar
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  Speaker 1: annual net profit, which is up thirty one percent from
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  Speaker 1: last year. Now. Two main reasons Miamigo on the one hand,
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  Speaker 1: the aggressive cost cutting that has seen Telstra cut much
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  Speaker 1: of its workforce, and two, Telstra sow growth in its
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  Speaker 1: mobile business ah yes it's mobile eba dark group to
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  Speaker 1: five point three billion dollars, which is a two hundred
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  Speaker 1: and thirty five million dollar year on year jump. And
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  Speaker 1: Jazi Boyd Telstra owes a big shout out to hire
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  Speaker 1: r pu ARPU for doing lots of the heavy lifting,
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  Speaker 1: and to top things off, telst renounced plans to buy
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  Speaker 1: back a billion dollars worth of shares. So what is
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  Speaker 1: the not happy jan key? Learning? Aar POO or average
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  Speaker 1: revenue per user measures how much revenue the company earns
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  Speaker 1: on average from each customer over a given period, and
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  Speaker 1: for Telstra is one of the most important metrics for profit. Yeah.
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  Speaker 1: In FO twenty five, higher rpoo was a key driver
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  Speaker 1: behind their two hundred and thirty five million dollar lift
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  Speaker 1: in mobile ebit dart. As part of this year Jazzi Boy,
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  Speaker 1: Telstra rolled out price increases of three to five bucks
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  Speaker 1: per month for its mobile plans and be Man, Well,
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  Speaker 1: it might sound small, it becomes a very big number
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  Speaker 1: when it's multiplied across twenty four million retail mobile services.
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  Speaker 1: But boosting a poo isn't just about charging more for
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  Speaker 1: the same plan. Nope, Telstra can grow this figure by
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  Speaker 1: offering bundle services like mobile and home internet together, or
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  Speaker 1: adding premium features like extra data, and of course sucking
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  Speaker 1: everybody into the international roaming fees. Yeah, so, b man,
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  Speaker 1: Telstra's trying to keep investors happy by squeezing more value
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  Speaker 1: from each customer and cashing in on record profits. For
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  Speaker 1: our second story, Westpax profit has jumped fourteen percent in
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  Speaker 1: the most recent quarter, but mortgage brokers keep eating its lunch.
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  Speaker 1: It's a hungry industry, isn't it. Juzzy boy, Nom nom nom.
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  Speaker 1: So what is the story here? Okay? So, Westpac's the
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  Speaker 1: oldest bank in Australia, founded in eighteen seventeen as the
• 3:17
  Speaker 1: Bank of New South Wales, and Westpac is Australia's second
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  Speaker 1: largest home loan lender, only behind the Commonwealth Bank of Australia.
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  Speaker 1: Westpac's quarterly profit juzzy Boy went up fourteen percent to
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  Speaker 1: one point nine bill and b man its coordinate interest
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  Speaker 1: margin jumped up five bases points to one point eighty
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  Speaker 1: five percent. And investors liked what they saw because Westpac's
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  Speaker 1: share price increased six percent. But b Man at slow
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  Speaker 1: down because despite the towel wins this quarter, these may
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  Speaker 1: not stick around for the upcoming quarter. Big call from you, particularly,
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  Speaker 1: why do you think so? Well? Just forty six percent
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  Speaker 1: of Westpac's new home loans came directly from the bank,
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  Speaker 1: and that's down from March and almost three percent low
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  Speaker 1: of them last year. So while the results trended upwards,
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  Speaker 1: Westpac needs to focus on improving its distribution channels. Yes,
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  Speaker 1: so what is the key learning here? Distribution channel strategy
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  Speaker 1: is all about deciding how business gets its product or
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  Speaker 1: service to its customers. For banks, the two big channels
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  Speaker 1: for home loans aret one the direct channel, that's when
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  Speaker 1: customers come straight to the bank, and banks love this
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  Speaker 1: channel because it means the bank keeps all the margin
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  Speaker 1: and the customer relationship. And the other channel we're talking
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  Speaker 1: about here is brokers. Yeah, those are the intermediaries who
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  Speaker 1: match borrows with lenders and their home loans and jose bait.
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  Speaker 1: The broken channel has grown rapidly in Australia, but b
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  Speaker 1: Man direct loans are much more profitable for banks because
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  Speaker 1: there's no broker commission. Not to forget, the banks can
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  Speaker 1: cross sell other products like credit cards or insurance. But
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  Speaker 1: right now in Australia, brokers originate roughly seventy five percent
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  Speaker 1: of new Australian homelans and clearly they're starting to eat
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  Speaker 1: into Westpac's direct channel lunch. So b Man at Westpac
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  Speaker 1: knows that if it wants to keep its net interest
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  Speaker 1: margin at a tasty level. It needs to bring borrows
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  Speaker 1: back into the branch. For our third and final story, Perplexity,
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  Speaker 1: the AI search engine has put in an offered by
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  Speaker 1: Google's Chrome for more than thirty four billion US dollars.
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  Speaker 1: Shots have been fired. Perplexity FLEXI year a man. So
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  Speaker 1: what is going on? Well? In April this year, we
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  Speaker 1: spoke about how US courts have ruled Google has two
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  Speaker 1: monopolies in online search as well as in ad tech,
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  Speaker 1: and this could result in the breakup of Google and
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  Speaker 1: back then open Ay's head of product they'd be keen
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  Speaker 1: to by Google's Chrome if the court forced Google to
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  Speaker 1: sell it. But it didn't really go any further. But
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  Speaker 1: now Perplexity has taken it one step further. Perplexity is
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  Speaker 1: of course best known for its AI powered search engine,
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  Speaker 1: but now it's lobbing bids for one of Google's most
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  Speaker 1: valuable products. And to make matters worse for Google, it's
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  Speaker 1: just days before Google Chrome's twentieth birthday. Cop that does
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  Speaker 1: it boid. The experts aren't exactly betting their lunch money
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  Speaker 1: on the deal going through, no, but it is the
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  Speaker 1: first public and formal deal to try to snatch Chrome
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  Speaker 1: away from Google, and for Google, Chrome is so much
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  Speaker 1: more than just a search engine. So what's the key
• 5:46
  Speaker 1: learning here? The value of a business unit on its
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  Speaker 1: own can be very different from its value within a
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  Speaker 1: larger company. It's called synergy value, and it's all about
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  Speaker 1: the extra benefit that a parent company gets from owning
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  Speaker 1: a specific asset. For Google, Chrome isn't just that's the
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  Speaker 1: web browser NP. It's a funnel that helps feed its
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  Speaker 1: search business with user data and add opportunities, as well
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  Speaker 1: as giving them the default market position. That's why losing
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  Speaker 1: Chrome could have an outsized effect on Alphabet's revenue, even
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  Speaker 1: if the standalone sale price is thirty four to even
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  Speaker 1: fifty billion bucks. In fact, be Man Barkley's Bank reconds
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  Speaker 1: that the sale of Google Chrome could lead to a
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  Speaker 1: fifteen to twenty five percent drop in Alphabet share price.
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  Speaker 1: In dollar terms, it could wipe between three hundred and
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  Speaker 1: seventy and six hundred and fifteen billion US dollars in
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  Speaker 1: Alphabet's market value now. So, while Perplexiti's offer has made
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  Speaker 1: the headlines, do not expect Google to be rushing to
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  Speaker 1: sign on that dotted line BOXAM over this weekend. This
• 6:38
  Speaker 1: is the time to read our latest article on account
• 6:40
  Speaker 1: of tract your expenses to glow up your bank account.
• 6:43
  Speaker 1: When you read that, on top of using the Flux
• 6:44
  Speaker 1: budgeting tool, it is the ultimate dynamic duo. Make sure
• 6:47
  Speaker 1: to download the Flux app and check it out. Thanks
• 6:49
  Speaker 1: for listening and we'll see you on Monday.