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Speaker 1: This is what the Flux.

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Speaker 2: I'm Brad Justin and it's Friday, the thirtieth of August.

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Speaker 1: Jusey boy. We've spoken about the rollercoaster ride that is

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Speaker 1: Setire a lot over the past few months.

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Speaker 2: Now.

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Speaker 1: Setire has worn the market that its auditors have beil

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Speaker 1: to sign off on their financial accounts. Apparently the situation

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Speaker 1: is quote nuanced and ongoing, but not the best sign

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Speaker 1: from a company that has already been doubted by many.

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Speaker 2: Very worrying signs. B Man sucks. Fam. It is Friday,

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Speaker 2: and that means we are given away fifty bucks once

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Speaker 2: again to the smartest Flux user. All we've got to

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Speaker 2: do is download the Flux app, play quick Sticks and

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Speaker 2: be the first to answer three questions correctly, and that

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Speaker 2: money could be yours to start off the weekend. To

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Speaker 2: make sure to download the app and have your noted

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Speaker 2: patients turned on.

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Speaker 1: Three rip Snorter stories today. Juzzy boy, Let's do it

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Speaker 1: for our first West farmers have seen its annual sales

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Speaker 1: jump to more than forty four billion bucks, and it's

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Speaker 1: putting a heap of praise on one particular business.

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Speaker 2: Surely it's came out, Surely it's came out. It's got

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Speaker 2: to be came out, tell me more. Be man, well dyboy.

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Speaker 1: West Farmers is the WABA owner of some of the

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Speaker 1: biggest name brands in Australian retail.

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Speaker 2: We'd be talking your bannings, your targets, your office works,

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Speaker 2: your price lines, catches it, your silk, got laser clinics.

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Speaker 1: But Jasie boy. It also owns industrial and safety businesses,

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Speaker 1: as well as chemicals and energy and fertilizer businesses.

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Speaker 2: Clean Heats, Yeah, Black hoods.

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Speaker 1: Now Jazzi Boy. West Farmers has announced its sales for

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Speaker 1: the last financial year jumped by one point five percent

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Speaker 1: to over forty four billion dollars and off.

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Speaker 2: The back of these sales, its delivered a tasty net

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Speaker 2: profit of two point six billion baccarinis.

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Speaker 1: All right, Josi boy. So which of these retailers deliver

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Speaker 1: the goods for good old Wessy's.

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Speaker 2: Well, no surprises here, but West Fharma CEO called came

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Speaker 2: out the standout performer because it's profit jumped to get

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Speaker 2: this twenty five percent to nearly one billion dollars.

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Speaker 1: And in particular it's home brand Ancho, which it now

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Speaker 1: sells in Kmart and Target and to other retailers globally.

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Speaker 2: But began interestingly, West Farmers Chemicals, Energy and Fertilizers division

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Speaker 2: got hit hard. It's earning film more than thirty four percent,

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Speaker 2: largely because of lower commodity prices. But that is the

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Speaker 2: benefit of having a diversified portfolio of businesses and brands.

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Speaker 1: So what's the key learning here.

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Speaker 2: Business diversification is a strategy that involves holding assets across

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Speaker 2: different sectors to reduce your risk.

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Speaker 1: Now, West Farmers is a textbook example of this business diversification. Yep,

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Speaker 1: it has department store retail like Kmart, Target Catch, It's

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Speaker 1: got hardware retail that would be Bunning's office, and stationary retail.

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Speaker 1: You've got office works making big things happen, and.

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Speaker 2: Even chemicals and energy, which we mentioned before.

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Speaker 1: And having this diverse portfolio helps West Farmers cushion the

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Speaker 1: blow of a downturn in any single sector.

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Speaker 2: For example, the chemicals business plummeted, the Kmart's gyptastic products

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Speaker 2: picked up the slack.

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Speaker 1: But jes it boy, there's also a flip side to

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Speaker 1: this over diversification.

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Speaker 2: That's when companies diversified too much and they risk becoming

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Speaker 2: a jack of all trades but really a master.

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Speaker 1: Of none looking at you, General Electric, which used to

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Speaker 1: be the largest company in the United States, but it's

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Speaker 1: found its fingers in way too many pies and has

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Speaker 1: since split up into three separate companies. So the key

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Speaker 1: is diversifying enough to spread risk, but staying focused on

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Speaker 1: core strengths.

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Speaker 2: Yep. For our second story, Quantus has reported a sixteen

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Speaker 2: percent drop in its annual profit in its first annual

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Speaker 2: update since new CEO, Vanessa Hudson stepped in. Pretty sure

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Speaker 2: if Quantus reported a profit jump like Calls, customers would

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Speaker 2: be for human So what is the story here? We'll

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Speaker 2: be men. Quantuses Australia's national airline carrier. It's also the

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Speaker 2: third oldest airline in the world. Fun fact for you.

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Speaker 1: And for a better part of the pandemic, Quantus was

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Speaker 1: consistently in the news for pretty much all the wrong reason.

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Speaker 2: We're talking mass layoffs, profiting off ghost flights and h POC.

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Speaker 1: Inquiry and a new CEO brought in with the hopes

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Speaker 1: to turn Quantus's fate around.

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Speaker 2: And now be man. Quantus has brought in a two

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Speaker 2: point one billion dollar profit, but this is a sixteen

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Speaker 2: percent drop compared to last year.

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Speaker 1: And this one has come after Quantus amped up spending

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Speaker 1: to settle some legal cases and really focus on building

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Speaker 1: customer relationships. They also spent four hundred million baccarinis on

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Speaker 1: a share buy back to keep investors happy. And just Boy,

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Speaker 1: a big part of Quantus's narrative is that it's repairing

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Speaker 1: itself and its customer relation.

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Speaker 2: And so it's new CEO's first earnings update was focused

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Speaker 2: on cleaning up the damage caused by its previous management.

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Speaker 1: Interesting, so I'm wondering what is the key learning here.

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Speaker 2: When a new CEO steps in, they often get a

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Speaker 2: free pass in their first few earnings updates.

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Speaker 1: Especially if that new CEO is replacing someone who is

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Speaker 1: considered to have underperformed.

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Speaker 2: That means they can blame previous management for any poor

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Speaker 2: results in the first earnings update.

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Speaker 1: Ah, yes, our profit drops sixteen percent.

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Speaker 2: Well, don't look at me, it was the last guy,

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Speaker 2: then this way, b man. New CEOs can also justify

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Speaker 2: making bowl and sometimes costly decisions as a way to

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Speaker 2: reset the company.

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Speaker 1: And JOSEP Boy is not just Quantus, even old tab Corps.

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Speaker 1: New CEO has just axed a turnaround strategy that was

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Speaker 1: introduced by previous.

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Speaker 2: Management and written down more than five hundred million bucks

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Speaker 2: worth of assets with the hope of resetting the business.

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Speaker 1: So Quantus's new CEO might be able to pinpop performance

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Speaker 1: on the previous CEO for.

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Speaker 2: Now, but she'll be held accountable for a lot more

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Speaker 2: when the next annual update comes around.

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Speaker 1: For our third and final story, in Vidia, the AI

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Speaker 1: chip designer, exceeded its quarterly guidance on all the key metrics,

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Speaker 1: but Jessie boy Its share price dropped more than seven percent.

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Speaker 2: Tough gig for InVideo investors always wanting more, so give

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Speaker 2: me the chippy update.

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Speaker 1: So we know. In Video was founded in nineteen ninety

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Speaker 1: three as a computer chip company mainly designing for video games. Whatever.

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Speaker 2: The last few years, in Videos become the chip behind

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Speaker 2: many of the world's biggest tech companies who were hoping

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Speaker 2: to get into AI.

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Speaker 1: Think Amazon, Meta, Microsoft, Alphabet. Its share price has increased

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Speaker 1: by two nine hundred percent over the past five years.

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Speaker 2: And in Video skyrocketed to become the third most valuable

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Speaker 2: company in the whole wide world.

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Speaker 1: Now, Dozzy Boy in Video CEO, strutted on stage in

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Speaker 1: his leather jacket and reported the company's quarterly update. Yeap

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Speaker 1: in Video's revenue for the previous quarter hit thirty billion

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Speaker 1: US dollars. Now, this number was up sixteen percent on

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Speaker 1: the previous quarter and one hundred and fifty four percent

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Speaker 1: on this time last year. That all sounds pretty down

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Speaker 1: good juzzy boy. So I'm wondering, just having a look

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Speaker 1: over here, what the bananas happened to its share price?

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Speaker 2: Well, my friend, it dropped nearly seven percent off the

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Speaker 2: back of this news.

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Speaker 1: Well, good news just isn't good enough for invideos investors.

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Speaker 2: So what is the key learning here?

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Speaker 1: Continually smashing your guidance can create almost too high expectation,

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Speaker 1: you seeb Man.

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Speaker 2: When a company consistently smashes its revenue forecast, it sets

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Speaker 2: a high bar for future.

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Speaker 1: Performance, which can be difficult to maintain over the long term.

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Speaker 1: And does it wait the moment when in Video meets

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Speaker 1: but doesn't significantly exceed expectations, That might be a signal

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Speaker 1: to investors, a signal, well, a signal of the peak

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Speaker 1: of the AI boom might be rearing its ugly head.

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Speaker 2: Flux Sam, if you can see yourself a bit of

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Speaker 2: a business buff, then you need to test yourself with

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Speaker 2: quick sticks. Our weekly gain every single Friday. It's three

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Speaker 2: questions on business and finance, and the first person to

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Speaker 2: answer correctly wins fifty bucks to kick off the weekend.

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Speaker 2: Make sure you download the Flux app and have you

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Speaker 2: aduications turned on.

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Speaker 1: Thanks for listening, and we'll see you on Monday.