Latest / What the Flux / CommBank's $9.8b profit | Telstra's writing it down | Meta's music collab

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CommBank's $9.8b profit | Telstra's writing it down | Meta's music collab · What the Flux

• 0:05
  Speaker 1: This is what the Flux I'm Brett and I'm justin
• 0:07
  Speaker 1: added Friday to sixteenth of all.
• 0:09
  Speaker 2: With Dzzy boy.
• 0:10
  Speaker 3: Australian wages increased at their slowest pace in a year
• 0:14
  Speaker 3: in the June quarter. I'm talking it went up by
• 0:16
  Speaker 3: zero point eight percent in the three months to June.
• 0:18
  Speaker 2: According to the ABS.
• 0:20
  Speaker 3: Now that is good news for the RBA who did
• 0:23
  Speaker 3: not want to see wages pumping up this economy.
• 0:26
  Speaker 1: Slewed down Wages boxapp. If you're looking for a boost
• 0:29
  Speaker 1: to your cash then there is one simple way. It
• 0:31
  Speaker 1: is our weekly quiz quick Stick where if you're the
• 0:33
  Speaker 1: first person to adds that three business or finance questions
• 0:35
  Speaker 1: correctly in the Flux app, you win fifty bucks of
• 0:38
  Speaker 1: cold hard cash. The perfect way to start your weekend.
• 0:40
  Speaker 1: To make sure you download the Blocks app and have
• 0:42
  Speaker 1: your notifications turned on today three.
• 0:45
  Speaker 3: Truly revolutionary stories today, Dozzy boy Oo, let's do it
• 0:48
  Speaker 3: for our first combank has announced a whopping and I'm
• 0:51
  Speaker 3: talking whopping, nine point eight billion dollar cash profit for
• 0:54
  Speaker 3: the last twelve months after growing its customer base even further.
• 0:58
  Speaker 1: Not a small amount of cash profit, be mads, tell
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  Speaker 1: me what is going on here?
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  Speaker 2: Well, Juzzy Boy.
• 1:02
  Speaker 3: As you know, Combank is the big yellow bank with
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  Speaker 3: the biggest of big customer bases.
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  Speaker 1: Yeah, we're talking more than fifty point nine million customers
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  Speaker 1: in Australia.
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  Speaker 3: And it's no surprise that investors were eagerly awaiting Big
• 1:14
  Speaker 3: Yellow's results.
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  Speaker 1: And now b Man Combank's announced it's whopping a nine
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  Speaker 1: point eight billion dollar annual cash profit for the last
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  Speaker 1: financial year.
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  Speaker 3: And Big Yellow had a fair few things to get
• 1:23
  Speaker 3: excited about.
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  Speaker 1: Yeah, the number of odsies that use Combank as their
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  Speaker 1: main financial institution jumped by nearly one percent.
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  Speaker 3: That means more than one in three Australians use Combank
• 1:32
  Speaker 3: for things like their salary payments and their bank accounts.
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  Speaker 1: And b Man Big Yellow also dominated the business banking space,
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  Speaker 1: with more than twenty five percent of businesses with Kombak.
• 1:41
  Speaker 3: But Juzzi Boy CBA's profits actually fell in the second
• 1:44
  Speaker 3: half of the year in comparison to the first.
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  Speaker 1: Clearly it didn't seem to bother their rusted on investors,
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  Speaker 1: who now value Kombank at two hundred and twenty seven
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  Speaker 1: billion baccarinis.
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  Speaker 3: Yeah, and many other investors are still a bit unclear
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  Speaker 3: why Combank is valued. It's such a different valuation to
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  Speaker 3: its friends and its foes.
• 2:00
  Speaker 1: ADS, your West packs, your an Z's.
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  Speaker 2: That is a right. So what is the key learning here?
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  Speaker 1: Not all price to earning or PE ratios are created equally.
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  Speaker 3: Yep, Companies in the same industry can have wildly different
• 2:11
  Speaker 3: valuations based on their unique strengths and their growth potential.
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  Speaker 1: Get this, theman Combank is valued at twenty three times
• 2:17
  Speaker 1: its earnings.
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  Speaker 3: Its earnings were nine point eight billion, its market value
• 2:20
  Speaker 3: is two hundred and twenty seven billion.
• 2:23
  Speaker 2: That's twenty three times.
• 2:24
  Speaker 1: But on the other hand, banks like ANZ are only
• 2:26
  Speaker 1: valued at thirteen times earnings.
• 2:28
  Speaker 3: NAB is valued at let me just heat turned the
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  Speaker 3: page sixteen times earning.
• 2:31
  Speaker 1: And west PACs also sixteen times earnings.
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  Speaker 3: So how can different companies in the same industry have
• 2:36
  Speaker 3: different multiples?
• 2:37
  Speaker 2: Juzzy boy.
• 2:38
  Speaker 1: How a company like Combank might have a high earnings
• 2:40
  Speaker 1: ratio because of its dominance in market share.
• 2:42
  Speaker 2: Or perhaps its customer loyalty, all the fact.
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  Speaker 1: That investors just rate their execution.
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  Speaker 3: But ultimately, juzzyboy, it comes down to the level of
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  Speaker 3: guoth that investors believe will come from this company compared
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  Speaker 3: to its competitors.
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  Speaker 1: So it's better say there is a lot of pressure
• 2:55
  Speaker 1: on Combank to keep performing if it wants to maintain
• 2:57
  Speaker 1: its valuation.
• 2:58
  Speaker 3: For our second story, the Telstra has seen its annual
• 3:01
  Speaker 3: net profit take a double digit drop after its mobile
• 3:05
  Speaker 3: price rises just were not enough, juzzy boy, to offset
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  Speaker 3: some major expenses.
• 3:09
  Speaker 1: The BT really fully as many leavers as humanly possible
• 3:12
  Speaker 1: to get back on track.
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  Speaker 2: So what is going on here, well, juzzy boy.
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  Speaker 3: Telstra is the biggest of the telco networks in Australia.
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  Speaker 1: It was previously in by the government, but was first
• 3:20
  Speaker 1: started on its privatization journey in nineteen ninety seven when
• 3:23
  Speaker 1: it listed on the ASEX, back.
• 3:25
  Speaker 3: When the Adelaide Crows were premiers of VFL. How about that,
• 3:28
  Speaker 3: juzzy boy.
• 3:28
  Speaker 1: But over the past few years, the BIGT has been
• 3:30
  Speaker 1: struggling with a whole heap.
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  Speaker 3: Of costs and competitors eating into its market share, I
• 3:34
  Speaker 3: might add.
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  Speaker 1: Yeah, So now Telstra is announced a thirteen percent slide
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  Speaker 1: in an annual net profit to just under one point
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  Speaker 1: eight billion bucks.
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  Speaker 2: It's all bad news with you today, juzzy boy. Surely
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  Speaker 2: some good news for me.
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  Speaker 1: Well, it's earnings from its mobile division jump more than
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  Speaker 1: nine percent, but there.
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  Speaker 3: Were a whole heap of costs in the business as well.
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  Speaker 3: If I can just get negative for a second, talk
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  Speaker 3: me through a negative man. Well, we're talking two hundred
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  Speaker 3: and forty seven million dollars in redundancy costs, as well
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  Speaker 3: as right.
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  Speaker 1: Down's left and right and center to its enterprise business.
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  Speaker 3: A division of the company that struggled more than Joe
• 4:03
  Speaker 3: Biden would in a one hundred meters sprint in the Olympics.
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  Speaker 1: Also right down to its retail energy business retails on
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  Speaker 1: its business leases.
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  Speaker 2: But despite this huge drop and profit it's share price
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  Speaker 2: it's still somehow miraculously it went.
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  Speaker 1: Up, mainly because these write downs are helping Telstra get
• 4:17
  Speaker 1: back on track.
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  Speaker 3: Oh that's a big call for me, juzy boy. So
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  Speaker 3: right now I'm wondering what is the key learning here?
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  Speaker 1: Write downs It may look like a red flag on
• 4:24
  Speaker 1: a company's profit and lost statement, but in reality they're
• 4:26
  Speaker 1: not always as bad.
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  Speaker 2: As they see, Yeah, juzzy boy.
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  Speaker 3: A write down occurs when a company reduces the value
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  Speaker 3: of an asset that it owns, and that's often.
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  Speaker 1: Because it's overvalued compared to its current market value.
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  Speaker 3: Now In Telstra's case, it wrote down the value of
• 4:38
  Speaker 3: its enterprise business by three hundred and eleven million buckaroonies.
• 4:42
  Speaker 1: But but man, that doesn't mean three hundred and eleven million
• 4:44
  Speaker 1: dollars in cash is leaving the Telstra business.
• 4:46
  Speaker 2: Now.
• 4:47
  Speaker 3: It's an accounting thang which lowest Telstra's reported profits.
• 4:50
  Speaker 1: And ultimately the amount of tax the Telstra needs to pay.
• 4:53
  Speaker 2: The taxes. It's always about the taxes, juzzy boy.
• 4:55
  Speaker 1: And that's why some companies strategically use right downs to
• 4:58
  Speaker 1: manage their financial statements and tax obligations as well.
• 5:01
  Speaker 3: And it's a key part of the reason why Teltra
• 5:03
  Speaker 3: share price did not take a hit.
• 5:05
  Speaker 1: For our third and final story, Universal Music Group and
• 5:08
  Speaker 1: Meta are expanding their music licensing deal, which will make
• 5:11
  Speaker 1: Universal songs available on all of Metas platforms.
• 5:15
  Speaker 3: Take that TikTok, talk about rubbing salt into the wound,
• 5:18
  Speaker 3: Josey Way, What is the story right here?
• 5:20
  Speaker 1: All right? Well? Universal Music Group is one of the
• 5:21
  Speaker 1: biggest record labels worldwide.
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  Speaker 3: It's the name behind major artists like Taylor Swift, Billie Eilish,
• 5:26
  Speaker 3: The Weekend, Kendrick Lamar, don't.
• 5:29
  Speaker 1: Forget Cissa and now be Man. Universal's just announced that
• 5:32
  Speaker 1: it's expanding it's a multi year music license with Meta.
• 5:35
  Speaker 2: Big news for Scissor Juzzy Boy.
• 5:37
  Speaker 1: That means Universal songs will we made available across all
• 5:40
  Speaker 1: of metas platforms and Jose Boy.
• 5:41
  Speaker 3: This deal is off the back of a fallout between
• 5:43
  Speaker 3: Universal and TikTok that happened earlier this year.
• 5:46
  Speaker 2: That was huge.
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  Speaker 1: Yeah, Universal took its music and left TikTok after the
• 5:49
  Speaker 1: two companies were unable to agree on a royalty rate.
• 5:52
  Speaker 3: But Universal reckons that its new deal with Meta expands
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  Speaker 3: financial opportunities for Universal.
• 5:57
  Speaker 1: And protects the royalties of its artist.
• 5:59
  Speaker 2: Oh the win win, hoping for the best of both worlds.
• 6:02
  Speaker 1: So what is the key learning here?
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  Speaker 3: Music labels are currently walking a tightrope between short term
• 6:06
  Speaker 3: success and long term financial growth.
• 6:08
  Speaker 1: On the one hand, music labels need social media for
• 6:11
  Speaker 1: their artist's music to be discovered.
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  Speaker 3: In fact, fifty percent of people age eighteen to twenty
• 6:15
  Speaker 3: four use social to discover new music.
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  Speaker 1: And this helps artists catapult their careers in ways they
• 6:20
  Speaker 1: didn't even know possible.
• 6:21
  Speaker 3: Think Doja Cat and now Charlie XCX, whose careers popped
• 6:25
  Speaker 3: off after their music went viral.
• 6:26
  Speaker 2: On social But.
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  Speaker 1: On the other hand, these artists also need to be
• 6:29
  Speaker 1: compensated for their work.
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  Speaker 2: Which was apparently a challenge for old TikTok.
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  Speaker 1: So it looks like Universal was trying to find the
• 6:34
  Speaker 1: middle ground with its new metadis fortam. If you think
• 6:37
  Speaker 1: you've got the best knowledge on business and finance over
• 6:40
  Speaker 1: the past week, and there's one way to prove it.
• 6:42
  Speaker 1: It's through quick stix three business questions and if you're
• 6:44
  Speaker 1: a first to answer correctly, you win fifty bakarunies. Make
• 6:47
  Speaker 1: sure to download the Flux app and have your noted
• 6:49
  Speaker 1: pasions turned on.
• 6:49
  Speaker 2: Thanks for listening and we'll see you on Monday.