Greg Smith: Devon Funds Management representative on market value results, Spark, Sky TV, Fonterra and Australian real estate giant

Spark has lost $1 billion in market value, a result that was greeted with shock by investors.

Sky TV also reflected a tough economy, while Fonterra jumped after lifting earnings forecasts. 

Crossing the Tasman, an American real estate giant has launched a A$2.6B bid for Australian real estate portal domain. 

Greg Smith of Devon Funds Management talks to Mike Hosking about the outcomes. 

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Episode Transcript

Speaker 1 (00:00):
From Demon Fund's management, Greg Smith, morning to you, Morning you, Mike,
was spark a surprise at that level.

Speaker 2 (00:07):
It was a surprise the market was expecting a poor
result that it was much poorer than expected. There wasn't
really any bright spots in a major way at all.
So it was seeing some earning disappoints over the year,
but this one was an absolute doozy on Friday, so
the share price fell nineteen percent. That's a huge move
for such a big company. So what a billion dollars

(00:27):
from the telco's market value? Net profit that fell seventy
eight percent and then reduced the full year outlook as well.
So look, we know things are tough, we know we're
in a recession, but this was their third profit downgrade.

Speaker 3 (00:39):
In the year.

Speaker 2 (00:40):
So normally it gets sort a bit of an advanced
warning of these things, and investors didn't, and that's what
they're rected to. So we know the government's coming back
on spending, so to a business's consumers also looking for
better deals than a competit mobile market, so this is
all taking its toll. So what's the telco doing. They're
trying to reduce costs. You see lots of businesses are
doing that against the backdrop of a recession. Well look

(01:00):
what one minder Brits Spot. I suppose you could say
it as data centers, but it's still a small part
of the business for now. And they did also reaffirm
their dividend guidance for the full year. But that's something
because they're selling the rest of their steak can sell
to our company CONNECTSUS. So the investors just focused on
the underlying result there, Mike, and you are pretty poor
on it there. It wasn't the only one in the days.
Sky Network TV they fell three percent as well. They're

(01:21):
half unings down twenty six percent, so we know the
problems I've had before satellite migration project. But also the
recession is binding. But they've been spending lots on programming.
Good for coverage of the Paris Olympics, but leaves a
bit of a bill so they're going to moderate that.
But good news for them as they have got that
six year deal on the home matches for black Caps
and White Ferns. But I suppose you have to say, Mike,

(01:42):
last week you look at the results in Spark Sky TV,
sky City Finture building.

Speaker 3 (01:47):
They will really reflect how.

Speaker 2 (01:49):
Tough our economy is at the moment, I suppose the
brightness on the horizon. We had that RB and zed
Raycat and there'll be more of those in the coming months,
so maybe a better second half.

Speaker 3 (01:58):
Of the year.

Speaker 1 (01:58):
And we also have from Tira.

Speaker 2 (02:00):
That's right, and you talked obviously about the divestment plans there.
But yeah, Darius sector has been going well. Further reminded,
here's a fin Tierra. They've forecasts at full year twenty
five earnings will be in the upper half of their
previously announced range, and also forecasting a twenty four to
twenty five farm gate milk price midpoint of ten bucks
per kilogram of milk sids, so that would be a.

Speaker 3 (02:22):
Record milk collections.

Speaker 2 (02:24):
They are going well, favorable weather, so they are up
to one ten million kilograms milk solids and they said
there's going to be really strong in term difference. That's
all great news for dairy farmers. My frontier shoes themselves
are up almost five percent. And let's not forget there
was another big positive story for the sector last week
A two. They rose twenty percent on their results earlier
in the week, so they're doing well in China. Spite

(02:45):
declining birth rates and like a lot of exporters benefiting
from a weaker Kiwi dollar.

Speaker 1 (02:50):
Now what do we make of Domain, which of course
is partly owned by Channel nine and this this American bird.

Speaker 3 (02:56):
Yeah, it's really interesting.

Speaker 2 (02:57):
So US real estate giant coast they came out launched
a bid which values Domain at two point six billion
Australian dollars.

Speaker 3 (03:03):
So they just saw their years saw forty percent on.

Speaker 2 (03:06):
Friday nine sixty percent of Domain, so their shares sowed
over twenty percent. They said the BID's not enough. They
see Domain strategically important. It has been a prize to
joy set for them. So yeah, it's really interesting. It's
not the first time Coastar has been inquisitive. It's attempted
to buy a US portal move for five billion look
to do that from News Corp a couple of years ago,
bought on the market in the UK a really bit

(03:29):
of a global landgraud. They bought three D mapping property
mapping service Metaport for two point five billion last year.
So I suppose you know what if they do do it,
what they can probably do look to do is invest
more in Domain. So at the moment, Domain is much
smaller than bigger competitor Aria Group, which has around sixty
percent of online listings versus domains thirty percent. And Area

(03:49):
has just got much more financial firepower. So they've ded
over thirty billion dollars that's ten times domain. The deal
could leave all the playing field and that's what Coastar
did when it bought home homes in dot com in
twenty twenty one. So they invested about a billion dollars
in sales of marketing and it took them from being
a lagging listing site to the one of the most
popular in the US.

Speaker 3 (04:10):
So preeps stay tuned. And also it's a bit of
a signal here.

Speaker 2 (04:12):
Mike the CEO OFRIA, he jumped ship last week, so
weirdly go to domain, so it could be a bit
of a change.

Speaker 3 (04:18):
In the guard.

Speaker 1 (04:19):
Interesting numbers please, Yeah.

Speaker 2 (04:21):
So we had the dow down one point seven percent
on Friday and these some P five hundred he used.
Consumer sentiment fell ten percent. Is worries here about tariffs,
inflation and so on. We also had Home Sales and
Services P my week and expected nar'sack down.

Speaker 3 (04:34):
Two point two percent.

Speaker 2 (04:35):
Foot Sea was flat eight six five nine and Nick
caves up point three percent.

Speaker 3 (04:39):
Hang Staying had a big day.

Speaker 2 (04:40):
Tech stocks again on the charge, up four percent, a
SX two hundred down point three percent, ins X fifty. Obviously,
we were weighed down by Spark down one percent, twelve
seven five to two, Gold down three dollars two nine
three six and Ounce still around record levels. Oil down
couple of bucks seventy spot forty a barrel. Currency market's
keep we weaker against the US fifty seven point four.

(05:01):
We're up slightly against the adult ninety point three, British
pound forty five point five down slightly, Japanese year eighty
five point seven, down point six percent.

Speaker 3 (05:09):
This week, Mike, we've got.

Speaker 2 (05:11):
Plenty going on news, durable goods, GDP, USE, inflation results,
got Home Depot that's a big retail giants salesforce, AI
Darling and Video, and then Kervy retail sales card, spending
business consumer confidence, and we've got plenty of results, twenty
of them, including Meridian, Mercury and Somerset.

Speaker 1 (05:29):
Very good piece in the Herald yesterday. How many words
is that, by the way.

Speaker 3 (05:32):
I think it was about nine hundred something on that
Hope I hit hit the mark.

Speaker 1 (05:36):
No, No, it did it hit the mark. It just
took me a bit of time.

Speaker 3 (05:39):
That was all I go.

Speaker 1 (05:41):
Well Grigg Smith at Devon Funds Management.

Speaker 2 (05:44):
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