Speaker 1: This is what the Flux. I'm Brettan. I justin and Wednesday,
Speaker 1: the fifth of March, Juzy boy, it's a sad day
Speaker 1: for all the og Skype users. Microsoft has announced it
Speaker 1: will be shutting down Skype this May after acquiring it
Speaker 1: nearly fifteen years ago, or as they like to call it,
Speaker 1: retiring the product. All Skypes colleagues must be chipping in
Speaker 1: for its very large retirement gift.
Speaker 2: Three and a half trillion dollars is in the superannuation
Speaker 2: industry in Australia and the average Australian has more than
Speaker 2: one and a half super funds. If you're sitting there
Speaker 2: thinking that is me, there is only one place to go.
Speaker 2: That is in the Flux Academy. This month ll we
Speaker 2: color everything related to Superer, what it is, how to
Speaker 2: use it and how to choose the super fun most
Speaker 2: suitable for you.
Speaker 1: Make sure to go to the Academy this month to
Speaker 1: check it all out. Three colorful stories today, Juzzy boy,
Speaker 1: let's do it for our first. Amazon Australia has seen
Speaker 1: this revenue jump to seven point seven billion bakarunis in
Speaker 1: the last financial year, which is up nearly twenty percent
Speaker 1: compared to last year, the.
Speaker 2: Zon arriving at the doorstep of serious dominance. B Man,
Speaker 2: So tell me more.
Speaker 1: Well, juziboy, we know the Zon started in nineteen ninety
Speaker 1: four as a humble online bookseller, didn't make.
Speaker 2: A profit for many years, back when being an unprofitable
Speaker 2: company was not cool.
Speaker 1: Now, Amazon launched in Australia in twenty seventeen, and while
Speaker 1: they did start pretty quietly, they've spent a lot of
Speaker 1: money building up that brand. Here.
Speaker 2: In fact, be man, Amazon spent around twenty billion dollars
Speaker 2: investing in Australia.
Speaker 1: Seems to be paying off for the zone. Now. It's
Speaker 1: local revenue jumped nearly twenty percent. It's e commerce business
Speaker 1: in Australia jump twenty three percent. How about that cloud
Speaker 1: computing division aws up eighteen percent. But the winner winner
Speaker 1: Chicken Dinner was Amazon Prime. Yeah, Amazon's Prime loyalty subscription
Speaker 1: program jump thirty nine percent just for the last year.
Speaker 2: And b Man, Amazon law, Amazon's loyalty program is the
Speaker 2: subscription service that just keeps on delivering literally and financially.
Speaker 1: So what is the key learning here?
Speaker 2: Loyalty programs do more than just keep your customers loyal.
Speaker 2: They keep your customers spending.
Speaker 1: Get this one, juzy boy. Amazon Prime members sped around
Speaker 1: one thousand bucks per year on Amazon.
Speaker 2: Oh, non Prime members spend between one hundred and five
Speaker 2: hundred dollars.
Speaker 1: And that's the beauty of Amazon's loyalty program.
Speaker 2: Yeah, not only does it generate four hundred and eighty
Speaker 2: million dollars in revenue in Australia alone, but it's a
Speaker 2: full blown customer spending booster.
Speaker 1: They're on top of that, Amazon has a ninety three
Speaker 1: percent retention rate of Amazon Prime, and that is after
Speaker 1: the first year.
Speaker 2: And they man that's why so many other companies have
Speaker 2: tried to replicate Amazon Prime's loyalty program. You've got Uber
Speaker 2: with Uber one, West Farmers with one, Pass, Coals has
Speaker 2: its Coals Plus.
Speaker 1: And Cogan with its cogud one as well. And while
Speaker 1: it took a while for Amazon to hit its full
Speaker 1: potential in Australia, you can now see why it's starting
Speaker 1: to squeeze out local e commerce players.
Speaker 2: For our second story, mar Zinc, the snack and sweets giant,
Speaker 2: is planning to sell twenty five to thirty billion US
Speaker 2: dollars worth of bonds next week to finance its takeover
Speaker 2: of Kelenoba.
Speaker 1: This deal looking extra chewy. Tell me what's going on here? Okay?
Speaker 2: So, mar Zinc is the family owned human food, pet
Speaker 2: food and snacking behemoth.
Speaker 1: Started way back nonineteen eleven in the US of eight
Speaker 1: and is the owner of some of the mega food
Speaker 1: brands globally.
Speaker 2: We'd be talking Mars Bar obviously, and Milky Way, Mars's
Speaker 2: arch nemesis.
Speaker 1: Not to forget Maltese's Eminem's TwixT Delicious and Extra Chewing Gum.
Speaker 2: And let's not forget that Mars is fueling our four
Speaker 2: legged friends as well with pet foods like Whiskers and
Speaker 2: Royal Cannon.
Speaker 1: But Josie woit. In August last year, Mars announced they
Speaker 1: would acquire Kelenova for thirty five point nine billion bucks
Speaker 1: US dollars may add in an all cash deal.
Speaker 2: Arue Kellanova's the owner of Pringles and pop Tarts, Nutra Grain,
Speaker 2: Elsiembars and Josie.
Speaker 1: How are pop tarts these days? Are they still good? Delicious?
Speaker 2: And this combined company will be one of the top
Speaker 2: five package food and beverage companies in the whole wide world.
Speaker 1: Wait, someone's got to fund these pop tarts and this deal. Yep.
Speaker 2: So now Mars is planning to sell up to thirty
Speaker 2: billion US dollars of bonds in order to pay for Kelenover.
Speaker 1: And if this lands, this bond offering could become one
Speaker 1: of the largest M and A financing deals since twenty thirteen. Interesting,
Speaker 1: So what is the key learning here? When it comes
Speaker 1: to funding an acquisition, businesses have three main option.
Speaker 2: Option one pay for it with the cash that they
Speaker 2: have on hand, but when we're talking tens of billions
Speaker 2: of dollars that becomes pretty rare.
Speaker 1: Or Option two raise capital for the acquisition by issuing
Speaker 1: new shares.
Speaker 2: When a company creates new shares and dilutes the current ownership.
Speaker 1: And option three would be debt financing like a loan or.
Speaker 2: Bondsman Corporate bonds are a very common way for large
Speaker 2: companies to raise the capital without diluting their ownership, and.
Speaker 1: When a company issues bonds, it's essentially taking a loan
Speaker 1: from investors.
Speaker 2: They promised to pay interest known as coupon payments, and
Speaker 2: eventually return the principal amount at the maturity of the bond.
Speaker 1: And jazaweight bonds are often used to finance major acquisition.
Speaker 2: Remember when Microsoft sold nearly twenty billion dollars worth of
Speaker 2: bonds to fund its LinkedIn acquisition.
Speaker 1: Or when Anheuser Busch in BEV issued forty six billion
Speaker 1: US dollars of bonds that was to finance its acquisition
Speaker 1: of sab Miller.
Speaker 2: So Aman Masses already masters the chockey game, and this
Speaker 2: bond financing will give it a serious play for the
Speaker 2: snack throne as well. For our third and final story,
Speaker 2: Tesla is now taking steps to launch a ride sharing service.
Speaker 2: It could compete directly with Uber Lift and weimo.
Speaker 1: Genuine question, is there anything Tesla won't spook at one
Speaker 1: stage or another? Tell me more, okay?
Speaker 2: So, Tesla is the electric car giant that was founded
Speaker 2: in two thousand and three and launched the world's first
Speaker 2: mass market electric vehicle, the Model three.
Speaker 1: Now Elon Musk, one of the co founders of Tesla,
Speaker 1: has tested everything under the sun with Tesla, from the
Speaker 1: bulletproof cyber truck to AI powered Optimus robots.
Speaker 2: But now, be man, he's gone one further because Tesla
Speaker 2: has filed a charter party carrier permit in the US.
Speaker 1: Essentially, this is a license that will allow Tesla to
Speaker 1: own and operate a fleet of ride sharing cars and
Speaker 1: be Man.
Speaker 2: We know that Musk has spoken about an autonomous ride
Speaker 2: sharing network for about ten years.
Speaker 1: Been interestingly Jose boyit the license that they applied for
Speaker 1: will have human drivers that is so twenty eleven, with
Speaker 1: a plan to shift to full self driving at some
Speaker 1: stage in the future. And be Man.
Speaker 2: We know that Tesla's castles fell by more than forty
Speaker 2: four percent in January this year.
Speaker 1: And its dock price has dropped around this year, so
Speaker 1: it's clear why.
Speaker 2: It's trying to push into the ride sharing market. So
Speaker 2: what is the key learning here?
Speaker 1: When a company's core business slows down, it often needs
Speaker 1: to find new ways to grow, grow, grow.
Speaker 2: Think about it, by Man. Ride sharing is kind of
Speaker 2: a natural extension for Tesla.
Speaker 1: Well, it already has the cars, and it has brand
Speaker 1: loyalty even if it is declining. And be Man. By
Speaker 1: jumping into ride sharing, Tesla can build a new revenue stream,
Speaker 1: but also begin playing around with its self driving ambition.
Speaker 1: And be Man.
Speaker 2: We've seen other companies like Apple expand into new industries
Speaker 2: when their primary market's matured Yeap.
Speaker 1: Apple moved from iPhones into services like Apple Subscriptions and
Speaker 1: Apple TV Plus, which now makes up more than twenty
Speaker 1: one percent of its total revenue, so it's clear that.
Speaker 2: Tesla is planning a ride sharing service as a stepping
Speaker 2: stone towards its autonomous taxi dream Flex Am, do you
Speaker 2: know what your superfund returned last year on your superbalance? Well,
Speaker 2: if you don't, there is a lot to know and
Speaker 2: a lot to consider. We have it all covered in
Speaker 2: the Flux Academy this month. Make sure to download the
Speaker 2: Flux app to check it all out.
Speaker 1: Thanks for listening, and we'll see you on Friday.