This is at the Flux.
I'm bread and aur Justin and it's Friday, the second of August.
Not so fast their inflation you thought you could run away from us, juzzy boy. The June quarter's inflation rate was released yesterday and inflation dropped from four percent to three point nine percent. And juzy boy, many investors are thinking this could put to rest any talk of a rate rise next Tuesday.
Interesting man, did you know that twenty percent of tax pays in Australia own an investment property? No, it is true, absolute fact and fluxdam. We've rolled out a brand new academy this month all about investing in the property market. We take you through all the steps you need to understand your goals, what to look for when evaluating investment properties, and also how to get access to investment property funds. So if you want to check it out, it is
all in there. Check it out in the Flux Academy.
Three insightful stories today, juzzy boy, let's do it for our first. An Aussie vodka maker that makes a popular ready to drink vodka has gone into voluntary administration.
Always sad to hear stories like this. Be Man had quite a few lately, so tell me more some background. Bilson's Brewery was established in eighteen sixty five in northeast Victoria and is one of the oldest continuing beverage manufacturers in all of Australia. In twenty seventeen, the company behind the brewery that operated under the name Bilson's Beverages was taken over by new.
Owners and get this, juzzy Boy. In the years after twenty seventeen, business was booming, largely thanks to a ready to drink vodka product that it sold. They sell their stuff in Dan Murphy's BWS, many other stores and be Man.
Their annual sales actually reached around one hundred and twenty million bakarnis in the twenty three twenty four financial year.
Not bad. But this year things started to become real tough for old bilson yep. The company experienced a big fat slowdown in demand and also also juzzy boy chunky increases in the government xcise for alcohol and.
Now Bilson's Beverages has been put into administration.
And unfortunately for Bilson's it encountered a triple whammy of negative factors that ultimately brought on its demise.
So be man. Tell me what is the key learning here?
When a company is in the wrong place at the wrong time, survival can be very challenging.
Yeah, we know for small and medium sized businesses, whether in one challenge at a time can be hard.
But Bilsons they face three. Firstly, they face the cost of living pressures that are basically facing all consumer facing companies.
Yet reditary vodcas aren't quite necessary in the current market conditions.
Secondly, the company struggled to manage it costs as it scaled up its production over the last few years. And Thirdly, Bilson's faced big increases in the excise paid to the government, the.
Tax paid by alcohol companies.
Now get this, jazzy boy, alcohol makers paid the third highest rate of tax in the world in Australia.
And now, sadly, Bilson's is in the hands of administrators. For our second story, Microsoft saw its shares drop seven percent in its worst day since October twenty twenty two because it's AI revenue just missed its forecasts.
When you position yourself as AI royalty, you just can't be missing your numbers. Tell me more.
Okay, so we know Microsoft for its famous Microsoft Offer Suite.
Don't forget it's now infamous and uncoordinated Windows ninety five launch dancing, and of.
Course, more recently for making the big switch into cloud and AI.
And Jessie boy they have done so very successfully. In fact, their shares have jumped over fifty percent just over the last two years.
And Microsoft's twenty three twenty four revenue was on part with the entire economies of Greece and New Zealand.
But josebait, Microsoft has just released its quarterly results which really spooked investors quite a fair bit.
Revenue of fifteen percent year of year and well ahead of forecast. I would say that's pretty good. Earnings per share also above the forecast, I would say that is very very good. But Microsoft reported only a twenty nine percent growth in its a zuo cloud computing year when it was projected to grow thirty one percent. Next minute, Microsoft shares dropped seven percent, but be man. Apart from missing its cloud growth target, Microsoft is also spending a pretty penny on its AI capabilities.
That is a big claim by you, Josie Boyce. So what is the key learning here?
When exhaust roorbitan spending doesn't turn into exorbitant revenue, it can create doubts in a company's biggest believers.
Yep, all the major tech companies chasing AI glory are spending a ton of cash on software infrastructure and software development right now.
Get this, Microsoft invested nineteen billion US dollars in the June quarter into capital expenditure related to AI and a man For the true believers, this is all necessary to fund the AI long game.
But for many investors, AI spending just isn't converting into AI earnings fast enough. In fact, the man AI revenue hasn't grown into a big enough revenue stream to even be disclosed on Microsoft's financial results. And the pressure isn't just on Microsoft, but think also pressure on Amazon alphabet Meta.
Who shares all slid and average of eleven percent over the past month.
So Microsoft's drop in share price is just a little reminder that if they don't start making serious moll as soon, the heat will be on.
For our third and final story, Procter and Gamble suffered its slowest sales growth in six years as consumers started cutting back on brand name products.
Not your cheapest products on the market. So kind of does make sense what is going on herekab.
Man, you might not have heard of Procter and Gamble, but you've most certainly heard of the brands they own.
Well, let's just run me through them. Juzzy boy, We're.
Talking Joette, We're talking oralb, Vicks, Vapor Drops, Panteen, Head and Shoulders, just to name a few.
Also used to own Pringles and Kelloggs as well.
But Procter and Gamble's brands have been whacked in the fourth quarter sales.
While they saw volumes grow by one percent, it's net sales fell behind expectations and I'm talking more than two hundred million US dollary doo wow.
So what is the key learning here?
Well, in times of need, retailers often turn to promotions or discounts to attract consumers and juzzy boy, this strategy can be effective in driving short term sales spikes.
But be man. When a company uses promotions and discounts to get the attention of consumers, it might.
Help their volumes, but it comes at a price. Just a little example for you. P and G saw an improvement in the number of units sold, but their revenue was still down.
But not only that, discounting all the time can devalue.
A brand YEP, consumers might start to associate the brand with constant sales, and for some.
Consumers, lower prices may mean lower perceived value in the products.
Which all means they may wait for the next promotion rather than purchasing at the full price right now. Hello, can man do a seventy five percent off the price one hundred percent of the time?
So B ANDNG needs to balance their short term benefits of promotions with the long term health of their brand. Flex Sam if you are looking at investment property, we take you through house verst apartment location factors, researching suburbs and everything you need to know when it comes to investing in property. It's all in the Flux Academy this month and it is an absolute corker.
Thanks for listening and we'll see you on Monday.