WEBVTT - CommBank's $9.8b profit | Telstra's writing it down | Meta's music collab

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<v Speaker 1>This is what the Flux I'm Brett and I'm justin

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<v Speaker 1>added Friday to sixteenth of all.

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<v Speaker 2>With Dzzy boy.

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<v Speaker 3>Australian wages increased at their slowest pace in a year

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<v Speaker 3>in the June quarter. I'm talking it went up by

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<v Speaker 3>zero point eight percent in the three months to June.

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<v Speaker 2>According to the ABS.

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<v Speaker 3>Now that is good news for the RBA who did

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<v Speaker 3>not want to see wages pumping up this economy.

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<v Speaker 1>Slewed down Wages boxapp. If you're looking for a boost

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<v Speaker 1>to your cash then there is one simple way. It

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<v Speaker 1>is our weekly quiz quick Stick where if you're the

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<v Speaker 1>first person to adds that three business or finance questions

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<v Speaker 1>correctly in the Flux app, you win fifty bucks of

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<v Speaker 1>cold hard cash. The perfect way to start your weekend.

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<v Speaker 1>To make sure you download the Blocks app and have

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<v Speaker 1>your notifications turned on today three.

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<v Speaker 3>Truly revolutionary stories today, Dozzy boy Oo, let's do it

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<v Speaker 3>for our first combank has announced a whopping and I'm

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<v Speaker 3>talking whopping, nine point eight billion dollar cash profit for

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<v Speaker 3>the last twelve months after growing its customer base even further.

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<v Speaker 1>Not a small amount of cash profit, be mads, tell

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<v Speaker 1>me what is going on here?

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<v Speaker 2>Well, Juzzy Boy.

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<v Speaker 3>As you know, Combank is the big yellow bank with

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<v Speaker 3>the biggest of big customer bases.

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<v Speaker 1>Yeah, we're talking more than fifty point nine million customers

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<v Speaker 1>in Australia.

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<v Speaker 3>And it's no surprise that investors were eagerly awaiting Big

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<v Speaker 3>Yellow's results.

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<v Speaker 1>And now b Man Combank's announced it's whopping a nine

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<v Speaker 1>point eight billion dollar annual cash profit for the last

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<v Speaker 1>financial year.

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<v Speaker 3>And Big Yellow had a fair few things to get

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<v Speaker 3>excited about.

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<v Speaker 1>Yeah, the number of odsies that use Combank as their

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<v Speaker 1>main financial institution jumped by nearly one percent.

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<v Speaker 3>That means more than one in three Australians use Combank

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<v Speaker 3>for things like their salary payments and their bank accounts.

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<v Speaker 1>And b Man Big Yellow also dominated the business banking space,

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<v Speaker 1>with more than twenty five percent of businesses with Kombak.

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<v Speaker 3>But Juzzi Boy CBA's profits actually fell in the second

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<v Speaker 3>half of the year in comparison to the first.

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<v Speaker 1>Clearly it didn't seem to bother their rusted on investors,

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<v Speaker 1>who now value Kombank at two hundred and twenty seven

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<v Speaker 1>billion baccarinis.

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<v Speaker 3>Yeah, and many other investors are still a bit unclear

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<v Speaker 3>why Combank is valued. It's such a different valuation to

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<v Speaker 3>its friends and its foes.

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<v Speaker 1>ADS, your West packs, your an Z's.

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<v Speaker 2>That is a right. So what is the key learning here?

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<v Speaker 1>Not all price to earning or PE ratios are created equally.

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<v Speaker 3>Yep, Companies in the same industry can have wildly different

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<v Speaker 3>valuations based on their unique strengths and their growth potential.

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<v Speaker 1>Get this, theman Combank is valued at twenty three times

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<v Speaker 1>its earnings.

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<v Speaker 3>Its earnings were nine point eight billion, its market value

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<v Speaker 3>is two hundred and twenty seven billion.

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<v Speaker 2>That's twenty three times.

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<v Speaker 1>But on the other hand, banks like ANZ are only

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<v Speaker 1>valued at thirteen times earnings.

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<v Speaker 3>NAB is valued at let me just heat turned the

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<v Speaker 3>page sixteen times earning.

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<v Speaker 1>And west PACs also sixteen times earnings.

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<v Speaker 3>So how can different companies in the same industry have

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<v Speaker 3>different multiples?

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<v Speaker 2>Juzzy boy.

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<v Speaker 1>How a company like Combank might have a high earnings

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<v Speaker 1>ratio because of its dominance in market share.

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<v Speaker 2>Or perhaps its customer loyalty, all the fact.

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<v Speaker 1>That investors just rate their execution.

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<v Speaker 3>But ultimately, juzzyboy, it comes down to the level of

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<v Speaker 3>guoth that investors believe will come from this company compared

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<v Speaker 3>to its competitors.

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<v Speaker 1>So it's better say there is a lot of pressure

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<v Speaker 1>on Combank to keep performing if it wants to maintain

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<v Speaker 1>its valuation.

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<v Speaker 3>For our second story, the Telstra has seen its annual

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<v Speaker 3>net profit take a double digit drop after its mobile

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<v Speaker 3>price rises just were not enough, juzzy boy, to offset

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<v Speaker 3>some major expenses.

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<v Speaker 1>The BT really fully as many leavers as humanly possible

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<v Speaker 1>to get back on track.

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<v Speaker 2>So what is going on here, well, juzzy boy.

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<v Speaker 3>Telstra is the biggest of the telco networks in Australia.

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<v Speaker 1>It was previously in by the government, but was first

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<v Speaker 1>started on its privatization journey in nineteen ninety seven when

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<v Speaker 1>it listed on the ASEX, back.

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<v Speaker 3>When the Adelaide Crows were premiers of VFL. How about that,

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<v Speaker 3>juzzy boy.

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<v Speaker 1>But over the past few years, the BIGT has been

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<v Speaker 1>struggling with a whole heap.

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<v Speaker 3>Of costs and competitors eating into its market share, I

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<v Speaker 3>might add.

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<v Speaker 1>Yeah, So now Telstra is announced a thirteen percent slide

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<v Speaker 1>in an annual net profit to just under one point

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<v Speaker 1>eight billion bucks.

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<v Speaker 2>It's all bad news with you today, juzzy boy. Surely

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<v Speaker 2>some good news for me.

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<v Speaker 1>Well, it's earnings from its mobile division jump more than

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<v Speaker 1>nine percent, but there.

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<v Speaker 3>Were a whole heap of costs in the business as well.

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<v Speaker 3>If I can just get negative for a second, talk

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<v Speaker 3>me through a negative man. Well, we're talking two hundred

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<v Speaker 3>and forty seven million dollars in redundancy costs, as well

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<v Speaker 3>as right.

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<v Speaker 1>Down's left and right and center to its enterprise business.

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<v Speaker 3>A division of the company that struggled more than Joe

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<v Speaker 3>Biden would in a one hundred meters sprint in the Olympics.

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<v Speaker 1>Also right down to its retail energy business retails on

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<v Speaker 1>its business leases.

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<v Speaker 2>But despite this huge drop and profit it's share price

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<v Speaker 2>it's still somehow miraculously it went.

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<v Speaker 1>Up, mainly because these write downs are helping Telstra get

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<v Speaker 1>back on track.

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<v Speaker 3>Oh that's a big call for me, juzy boy. So

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<v Speaker 3>right now I'm wondering what is the key learning here?

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<v Speaker 1>Write downs It may look like a red flag on

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<v Speaker 1>a company's profit and lost statement, but in reality they're

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<v Speaker 1>not always as bad.

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<v Speaker 2>As they see, Yeah, juzzy boy.

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<v Speaker 3>A write down occurs when a company reduces the value

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<v Speaker 3>of an asset that it owns, and that's often.

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<v Speaker 1>Because it's overvalued compared to its current market value.

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<v Speaker 3>Now In Telstra's case, it wrote down the value of

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<v Speaker 3>its enterprise business by three hundred and eleven million buckaroonies.

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<v Speaker 1>But but man, that doesn't mean three hundred and eleven million

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<v Speaker 1>dollars in cash is leaving the Telstra business.

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<v Speaker 2>Now.

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<v Speaker 3>It's an accounting thang which lowest Telstra's reported profits.

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<v Speaker 1>And ultimately the amount of tax the Telstra needs to pay.

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<v Speaker 2>The taxes. It's always about the taxes, juzzy boy.

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<v Speaker 1>And that's why some companies strategically use right downs to

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<v Speaker 1>manage their financial statements and tax obligations as well.

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<v Speaker 3>And it's a key part of the reason why Teltra

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<v Speaker 3>share price did not take a hit.

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<v Speaker 1>For our third and final story, Universal Music Group and

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<v Speaker 1>Meta are expanding their music licensing deal, which will make

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<v Speaker 1>Universal songs available on all of Metas platforms.

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<v Speaker 3>Take that TikTok, talk about rubbing salt into the wound,

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<v Speaker 3>Josey Way, What is the story right here?

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<v Speaker 1>All right? Well? Universal Music Group is one of the

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<v Speaker 1>biggest record labels worldwide.

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<v Speaker 3>It's the name behind major artists like Taylor Swift, Billie Eilish,

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<v Speaker 3>The Weekend, Kendrick Lamar, don't.

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<v Speaker 1>Forget Cissa and now be Man. Universal's just announced that

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<v Speaker 1>it's expanding it's a multi year music license with Meta.

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<v Speaker 2>Big news for Scissor Juzzy Boy.

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<v Speaker 1>That means Universal songs will we made available across all

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<v Speaker 1>of metas platforms and Jose Boy.

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<v Speaker 3>This deal is off the back of a fallout between

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<v Speaker 3>Universal and TikTok that happened earlier this year.

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<v Speaker 2>That was huge.

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<v Speaker 1>Yeah, Universal took its music and left TikTok after the

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<v Speaker 1>two companies were unable to agree on a royalty rate.

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<v Speaker 3>But Universal reckons that its new deal with Meta expands

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<v Speaker 3>financial opportunities for Universal.

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<v Speaker 1>And protects the royalties of its artist.

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<v Speaker 2>Oh the win win, hoping for the best of both worlds.

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<v Speaker 1>So what is the key learning here?

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<v Speaker 3>Music labels are currently walking a tightrope between short term

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<v Speaker 3>success and long term financial growth.

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<v Speaker 1>On the one hand, music labels need social media for

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<v Speaker 1>their artist's music to be discovered.

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<v Speaker 3>In fact, fifty percent of people age eighteen to twenty

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<v Speaker 3>four use social to discover new music.

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<v Speaker 1>And this helps artists catapult their careers in ways they

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<v Speaker 1>didn't even know possible.

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<v Speaker 3>Think Doja Cat and now Charlie XCX, whose careers popped

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<v Speaker 3>off after their music went viral.

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<v Speaker 2>On social But.

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<v Speaker 1>On the other hand, these artists also need to be

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<v Speaker 1>compensated for their work.

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<v Speaker 2>Which was apparently a challenge for old TikTok.

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<v Speaker 1>So it looks like Universal was trying to find the

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<v Speaker 1>middle ground with its new metadis fortam. If you think

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<v Speaker 1>you've got the best knowledge on business and finance over

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<v Speaker 1>the past week, and there's one way to prove it.

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<v Speaker 1>It's through quick stix three business questions and if you're

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<v Speaker 1>a first to answer correctly, you win fifty bakarunies. Make

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<v Speaker 1>sure to download the Flux app and have your noted

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<v Speaker 1>pasions turned on.

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<v Speaker 2>Thanks for listening and we'll see you on Monday.