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Jack Ma Cedes Control of Fintech Giant Ant Group
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Tag: Corporate Actions
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Tesla stock wipes out three-day bounce, falls to lowest price in more than 2 years
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It has taken just one day for Tesla Inc.’s stock to erase the entire bounce it enjoyed over the last three days trading sessions of 2022, as disappointing deliveries data helped trigger the biggest selloff in more than two years.
The stock’s
TSLA,
-12.24%
Tuesday drop knocked the electric vehicle maker’s market capitalization to 15th on the list of most valuation S&P 500 index companies.On Tuesday, Tesla’s market cap fell below that of consumer products company Procter & Gamble Co.
PG,
+0.01% ,
with a current market cap of $359.18 billion, and was just below Nvidia Corp.
NVDA,
-2.05%
at $352.15 billion, according to FactSet data. Tesla sat just above Chevron Corp.
CVX,
-3.06% ,
which was at $336.43 billion. (See list of S&P 500’s 20 most valuable companies as of Tuesday’s closing prices below.)Tesla’s stock took a $15.08, or 12.2% dive, to $108.10 on Tuesday, to lead the S&P 500’s
SPX,
-0.40%
decliners, after the company reported over the weekend that fourth-quarter deliveries that came up short of expectations for the third quarter in a row. It suffered the biggest one-day decline since it plummeted 21.1% on Sept. 8, 2020, and closed at the lowest price since Aug. 13, 2020.With about 3.16 billion shares outstanding as of Oct. 18, the stock’s decline shaved about $47.62 billion off Tesla’s market cap, to bring it down to $341.35 billion. That’s a far cry from the peak market cap of $1.24 trillion reached exactly one-year ago.
After the stock hit the deepest oversold reading in its history based on the widely followed Relative Strength Index momentum indicator on Dec. 27, following the longest losing streak in more than four years, it ran up $14.08, or 12.9%, over the past three days.
If there’s a bright side to Tuesday’s stock selloff, it’s that even though the price fell below the Dec. 27 closing price, the RSI ended the day at 24.86, which is up from the Dec. 27 record low of 16.56.
That could be a preliminary sign of what chart watchers call “bullish technical divergence,” which is when prices make lower lows while the RSI makes a higher low. It’s still rather early to make that determination, however, as the stock needs to start bouncing again to see if RSI bottoms above the previous low.
Market caps of the Top 20 most valuable S&P 500 companies:
-
Apple Inc.
AAPL,
-3.74%
: $1.99 trillion. -
Microsoft Corp.
MSFT,
-0.10%
: $1.79 trillion. -
Alphabet Inc.
GOOGL,
+1.01%
GOOG,
+1.09%
: $1.16 trillion. -
Amazon.com Inc.
AMZN,
+2.17%
: $875.51 billion. -
Berkshire Hathaway Inc.
BRK.B,
+0.33%
BRK.A,
+0.17%
: $683.72 billion. -
UnitedHealth Group Inc.
UNH,
-2.18%
: $484.59 billion. -
Johnson & Johnson
JNJ,
+0.87%
: $465.88 billion. -
Exxon Mobil Corp.
XOM,
-3.44%
: $438.64 billion. -
Visa Inc.
V,
-0.18%
: $427.57 billion. -
JPMorgan Chase & Co.
JPM,
+0.76%
: $396.34 billion. -
Walmart Inc.
WMT,
+1.28%
: $387.26 billion. -
Eli Lilly and Co.
LLY,
-0.23%
: $360.29 billion. - Procter & Gamble Co.: $359.18 billion.
- Nvidia Corp.: $352.15 billion.
- Tesla Inc.: $341.35 billion.
- Chevron Corp: $336.43 billion.
-
Mastercard Inc.
MA,
-0.27%
: $333.43 billion. -
Meta Platforms Inc.
META,
+3.66%
: $331.58 billion. -
Home Depot Inc.
HD,
+0.02%
: $321.97 billion. -
Pfizer Inc.
PFE,
+0.04%
: $287.74 billion.
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Apple Inc.
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Micron sales could dive more than 50%, and more belt-tightening is expected before outlook improves
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Micron Technology Inc.’s revenue declines could worsen to more than 50% before inventory-saturated customers work though that product and boost sales in the second half of 2023, but before then the memory-chip maker is implementing some austerity measures.
Micron
MU,
+1.01%
said it expects an adjusted loss of between 72 cents and 52 cents a share on revenue of $3.6 billion to $4 billion for the fiscal second quarter, with the midpoint 51% lower than last year’s second-quarter revenue total of $7.78 billion. Analysts had forecast an adjusted loss of 32 cents a share on revenue of $3.92 billion.In a filing with the Securities and Exchange Commission, the memory-chip specialist disclosed that management plans to cut about 10% of its staff in 2023, “through a combination of voluntary attrition and personnel reductions.” About $30 million in restructuring costs are expected, all in the fiscal second quarter.
Along with headcount reductions, Micron said in 2023 it will also suspend share buybacks, productivity programs and company bonuses, and that executive salaries would be “cured” for the rest of the fiscal year. Sanjay Mehrotra, Micron’s chief executive, also told analysts after the release of results that he expected profitability to remain challenged through 2023.
Micron specializes in DRAM, or dynamic random access memory, the type of memory commonly used in PCs and servers, and NAND chips, which are the flash memory chips used in smaller devices like smartphones and USB drives.
Micron shares were down less than 1% after hours, following a 1% rise to close the regular session at $51.19. Micron shares are down 45% for the year compared with a 19% fall by the S&P 500 index
SPX,
+1.49%
and a 32% drop by the Nasdaq Composite Index
COMP,
+1.54%
and a 33% drop on the PHLX Semiconductor Index
SOX,
+2.36% .Mehrotra said he expects DRAM growth to rise by about 10% and NAND to rise by around 20%. “For both years, demand in DRAM and NAND is well below historical trends and future expectations of growth largely due to reductions in the end demand in most markets, high inventories at customers, the impact of the macroeconomic environment and the regional factors in Europe and China,” Mehrotra said.
“But the largest impact to the profitability and financial outlook for us is the supply-demand balance, and the rate and pace of this improvement is going to be a function of aligning supply with demand, and we’re taking decisive actions on CapEx and utilization to address it,” Mark Murphy, Micron’s chief financial officer, told analysts on the call.
Data-center and cloud sales were considered relatively safe, but in another potentially developing crack, Mehrotra said the current environment showed some softness in cloud data-center demand, given tighter consumer spending.
“We do absolutely expect that once we get past the current macroeconomic environment and macroeconomic weakening, longer-term trends for cloud will remain strong,” Mehrotra said. “In terms of the current environment, yes, inventory adjustments and some impact of cloud and demand weakening as well. That’s impacting our overall data-center outlook.”
The CEO also told analysts he expects customers to be in a much better position in the burning off of their inventories by the middle of 2023.
“By mid-calendar ’23, we are projecting, even though we don’t have perfect visibility, but based on all of our discussions with our customers, we are projecting that inventory at customers will be in relatively healthier position by that time.”
“And that’s where we say that our second half of fiscal-year revenue will be greater than first half, and we would expect continued improvements beyond the second half as well,” the CEO said.
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11 high-yield dividend stocks that are Wall Street’s favorites for 2023
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Investors love dividend stocks but there are different ways to look at them, including various “quality” approaches. Today we are focusing on high yields.
A high dividend yield can be a warning that investors have lost confidence in a company’s ability to maintain its dividend payout. But there are always exceptions, some of which can be brought about by market events — some investors remain skeptical of energy stocks, for example, after so much pain before this year’s outstanding performance for the sector.
Below is a screen of stocks that have high dividend yields and are favored by analysts. The screen has no financial quality filters.
For investors who are interested in dividend stocks but wish to focus on quality and total returns, this recent look at the S&P Dividend Aristocrats (companies that have raised dividends consistently for many years) might be of interest. For those looking for income but also worried about dividend cuts, here is a list of stocks with dividend yields of at least 5% whose payouts are expected to be well-covered by free cash flow in 2023.
If you are looking for higher yields with moderate risk, you should at also learn about funds that use covered-call option strategies to enhance income.
Removing the filters for a high-yield dividend-stock screen
For a broad screen of stocks with high dividend yields that are favored by analysts, we began with the S&P Composite 1500 Index
SP1500,
+1.42% ,
which is made up of the S&P 500
SPX,
+1.42% ,
the S&P 400 Mid Cap Index
MID,
+1.48% ,
and the S&P 600 Small Cap Index
SML,
+1.49% .The S&P indexes exclude energy partnerships, so we added the 15 stocks held by the Alerian MLP ETF
AMLP,
+1.81%
to the list. Energy partnerships tend to have high distribution yields, in part because they pass most earnings through to investors. But they also can make tax preparation more complicated. They can also be volatile as oil
CL00,
+2.96%
CL00 and natural-gas
NG00,
+1.58%
prices swing.The S&P indexes also exclude business development companies, or BDCs, so we expanded our initial screen to include the 24 stocks held by the VanEck BDC income ETF
BIZD,
+0.76% .
BDCs are specialized leveraged lenders that make loans with high interest rates, mainly to middle-market companies. They often take equity stakes in the companies they lend to, for a venture-capital-type of investment style. The BDC space features several stocks with very high dividend yields, but is also known for volatility.You have been warned — this particular stock screen focuses only on high yields and favorable ratings among analysts working for brokerage firms. There is no look back at dividend cuts and no cash-flow analysis as featured in other dividend-stock articles. If you see anything of interest resulting from the screen, you need to do your own research to consider whether or not a long-term commitment to one or more of these companies is worth the risk as you seek high income.
The screen
Starting with the S&P Composite 1500 and the components of AMLP and BIZD, there are 68 stocks with dividend yields of at least 8%, according to data provided by FactSet.
Among the 68 companies, 55 made the first screen, because they are covered by at least five analysts polled by FactSet.
Among the 55 companies, 11 have “buy” or equivalent ratings among at least 70% of analysts.
Here they are, ranked by upside potential implied by analysts’ consensus price targets:
Company Ticker Dividend yield Share “buy” ratings Dec. 20 price Consensus price target Implied 12-month upside potential Energy Transfer LP ET,
+2.35% 9.08% 95% $11.68 $16.24 39% Enterprise Products Partners LP EPD,
+0.88% 8.12% 79% $23.39 $31.69 35% Barings BDC Inc. BBDC,
11.67% 86% $8.14 $10.75 32% Redwood Trust Inc. RWT,
+2.70% 13.45% 80% $6.84 $8.92 30% Crestwood Equity Partners LP CEQP,
+0.78% 9.75% 100% $26.86 $35.00 30% KKR Real Estate Finance Trust Inc. KREF,
+1.38% 11.90% 71% $14.45 $18.50 28% Owl Rock Capital Corp. ORCC,
+0.38% 11.21% 91% $11.78 $14.73 25% Sixth Street Specialty Lending Inc. TSLX,
+1.89% 10.48% 82% $17.18 $20.90 22% Oaktree Specialty Lending Corp. OCSL,
-0.37% 9.97% 100% $6.77 $7.75 14% Ares Capital Corp. ARCC,
+1.22% 10.45% 93% $18.38 $20.87 14% BlackRock TCP Capital Corp. TCPC,
+1.76% 10.25% 71.43% $12.49 $14.00 12% Source: FactSet One way to begin your own research into any company listed here is to click on the ticker for more information.
You should also read Tomi Kilgore’s detailed guide to the wealth of information available free on the MarketWatch quote page.
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Tesla stock suffers worst week since 2020 as Elon Musk sells, large shareholder asks for new CEO
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Tesla Inc. shares Friday wrapped up their worst week since 2020, as Chief Executive Elon Musk sold billions in stock and faced a call from a prominent investor to step down from the helm of the electric-vehicle maker.
Tesla
TSLA,
-4.72%
stock fell 4.7% Friday for a weekly decline of 16.1%, the fourth-worst week in history for the shares after a series of three weeks in late February and early March 2020, when investors sold stocks in fear of the COVID-19 pandemic’s effects. Tesla ended the week with a market capitalization of less than $500 billion for the first time since November 2020, and the share price nearly fell lower than $150 for the first time since that month, ending the week at $150.05.In-depth: Tesla investors await clues on demand, board actions and weigh downside risks in 2023
The decline occurred as Musk sold stock, which he has done repeatedly since November of 2021. Musk disclosed the sale of more than $3.5 billion in Tesla stock late Wednesday, after performing the trades over the three previous trading sessions, when the price declined a cumulative 12.4%. In total, the Tesla CEO has sold $39.3 billion worth of Tesla stock in the past 13 months, according to calculations from Dow Jones Market Data and MarketWatch.
The recent sales have seemed tied to Musk’s acquisition of the social-media platform Twitter, which he bought for roughly $44 billion this year. It is the second time he has sold stock since closing that deal in October.
See also: Elon Musk’s $5.7 billion mystery gift has been revealed
Musk has reportedly been spending much of his time at Twitter, which seems to have angered some prominent Tesla investors. Leo KoGuan, Tesla’s third-largest individual shareholder, publicly called for a new CEO on Twitter this week, as a chorus of previously boosterish accounts on the service expressed dismay at the stock decline and Musk’s actions.
Bullish analysts have also expressed concerns about Musk’s focus and stock sales. Wedbush analyst Daniel Ives, who has an outperform rating and $250 12-month price target on Tesla shares, wrote Thursday that “Musk continues to throw gasoline in the burning fire around the Tesla story by selling more stock and creating Tesla brand deterioration through his actions on Twitter.”
“The nightmare of Musk owning Twitter has been an episode out of the Twilight Zone that never ends and keeps getting worse,” Ives wrote. “In late April Musk said he was done selling Tesla stock, instead the exact opposite has happened and put massive pressure on Tesla shares which have significantly underperformed the market since Musk took over Twitter in late October.”
Opinion: Why Tesla investors are the biggest losers in Elon Musk’s Twitter deal
Tesla shares have now declined 57.4% so far in 2022, as the S&P 500 index
SPX,
-1.11%
has declined 18.3%. Tesla’s market cap was $474.4 billion as of Friday’s close.[ad_2]
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Tesla’s ‘Twitter nightmare’ to continue, analyst says
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Tesla Inc. stock edged higher Thursday, but Wedbush analyst Dan Ives minced no words to decry what he called an ongoing Twitter Inc. “funding nightmare,” accusing Chief Executive Elon Musk to treat the electric-vehicle maker as an ATM machine.
“The nightmare of Musk owning Twitter has been an episode out of the Twilight Zone that never ends and keeps getting worse,” said Ives, a noted Tesla bull, in a note Thursday.
Musk…
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Elon Musk just sold $3.6 billion more in Tesla stock as Twitter turmoil continues
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Tesla Inc. Chief Executive Elon Musk just sold nearly $3.6 billion more of the company’s stock, according to a filing with the Securities and Exchange Commission released late Wednesday.
Musk sold just under 22 million shares worth $3.58 billion in aggregate from Dec. 12 to Dec. 14, the latest filing shows. Tesla shares TSLA fell in all three of those trading sessions, dropping 12.4% in total over the three-day stretch to finish Wednesday at $156.80.
This…
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Novozymes and Chr. Hansen agree deal to merge
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Danish biotechnology companies Novozymes AS
NZYM.B,
-10.74%
and Chr. Hansen Holding AS
CHR,
+25.98%
said Monday they have agreed to merge, creating a biological solutions provider with combined annual revenue of around 3.5 billion euros ($3.69 billion).The companies, which produce products such as enzymes, probiotics and biopharmaceutical ingredients, said the combination between two strategically complementary businesses will drive efficiencies while unlocking potential within biosolutions and providing additional growth opportunities.
“Novozymes and Chr. Hansen share the strong conviction that our combined scale, know-how, commercial strengths, and innovation excellence will drive value for our shareholders, customers and society at large,” said Novozymes Chief Executive Ester Baiget.
The deal will see Chr. Hansen shareholders receive 1.5326 new B-shares in Novozymes for each Chr. Hansen share, reflecting an implied premium of 49% to Chr. Hansen’s closing share price on Friday and valuing each Chr. Hansen share at 660.55 Danish kroner ($93.53) a share.
Novo Holdings AS, the largest shareholder in both Novozymes and Chr. Hansen, will support the proposed merger and exchange its 22% stake in Chr. Hansen at an exchange ratio of 1.0227 new B-shares in Novozymes.
The companies said they see annual revenue synergies of EUR200 million within four years after completion of the deal.
Write to Dominic Chopping at dominic.chopping@wsj.com
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WSJ News Exclusive | Amgen in Advanced Talks to Buy Horizon Therapeutics
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[ad_2]U.S. biotechnology company was the last of three suitors standing in an auction for Horizon
Source link -
FTC sues to block Microsoft’s $69 billion acquisition of game giant Activision Blizzard
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The Federal Trade Commission on Thursday sued Microsoft Corp. to block its $69 billion deal to buy Activision Blizzard Inc.
The acquisition, which would be Microsoft’s
MSFT,
+1.07%
largest and the biggest ever in the video gaming industry, would “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business,” the FTC claimed.“Microsoft has already shown that it can and will withhold content from its gaming rivals,” Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
FTC members pointed to Microsoft’s record of “acquiring and using valuable gaming content to suppress competition from rival consoles,” including its acquisition of ZeniMax, parent company of Bethesda Softworks.
Microsoft President Brad Smith indicated the software giant will fight the lawsuit. In a statement, he said Microsoft has “been committed since Day One to addressing competition concerns.”
“While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court,” Smith said.
Activision CEO Bobby Kotick, in a statement, said the suit “sounds alarming, so I want to reinforce my confidence that this deal will close. The allegation that this deal is anti-competitive doesn’t align with the facts, and we believe we’ll win this challenge.”
Still, In recent weeks Microsoft has taken steps to demonstrate to regulators its acquisition of Activision would not give it an unfair advantage in the gaming market. On Tuesday, Microsoft said it would bring the “Call of Duty” franchise to Nintendo Co.’s
7974,
-1.31%
Switch, a rival of Microsoft Xbox, and Microsoft has said it would make Call of Duty available on rival Sony Group Corp.’s
SONY,
-0.06%
PlayStation.“It’s a bad idea,” Geoffrey Manne, president of the International Center for Law and Economics, said of the FTC’s lawsuit vs. Microsoft. “There may be markets in which some activities of some of these large tech companies cause concerns, but when they are expanding into new markets or enhancing competition in markets where they aren’t leaders, we should be encouraging them, not threatening them with lawsuits.”
The government’s action in administrative court marks the first serious regulatory threat to Microsoft’s business in more than two decades, when the Justice Department brought a landmark antitrust lawsuit against the software giant that took years and was settled in 2002. Since then, Microsoft had sidestepped antitrust scrutiny and Smith in particular has focused the glare on its tech rivals Amazon.com Inc.
AMZN,
+2.24% ,
Apple Inc.
AAPL,
+1.19% ,
Alphabet Inc.’s
GOOGL,
-0.94%
GOOG,
-0.89%
Google, and Facebook parent company Meta Platforms Inc.
META,
+1.26% .Read more: Microsoft’s shadowy presence in antitrust push is angering the rest of Big Tech
Shares of Microsoft are up 1% in trading Thursday. Activision’s
ATVI,
-1.33%
stock is down 1.5%.The FTC’s lawsuit comes the same day it is heading to court in San Jose, Calif., in what is expected to be a three-week trial to bloc Meta’s $300 million acquisition of VR fitness app maker Within.
The trial is likely to showcase an intriguing look at the agency’s ability to stifle alleged anticompetitive conduct using largely untested legal theories at a time when Congress is sitting on tech antitrust legislation.
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Microsoft to bring ‘Call of Duty’ to Nintendo if Activision merger approved
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Microsoft Corp. said late Tuesday it has made a “10-year commitment” to bring the massively popular “Call of Duty” videogame series to Nintendo Co. consoles, when — and if — its merger with Activision Blizzard Inc. is completed.
In a tweet late Tuesday night, Xbox head Phil Spencer announced the deal. “Microsoft is committed to helping bring more games to more people – however they choose to play,” he said, adding: “I’m also pleased to confirm that Microsoft has committed to continue to offer Call of Duty on @Steam simultaneously to Xbox after we have closed the merger with Activision Blizzard King.”
Microsoft is awaiting federal approval of its $68.7 billion acquisition of Activision.
A deal to share one of Activision’s
ATVI,
-0.29%
most lucrative videogame titles could appease some antitrust concerns from regulators. Spencer told Bloomberg News that a similar offer had been extended to rival Sony Corp.
SONY,
-2.62%
for its PlayStation consoles, but said that offer had so far been rebuffed.A “Call of Duty” title has not been available on Nintendo since 2013.
In an interview with the Washington Post published Tuesday, Spencer said there was no Nintendo “Call of Duty” release date set yet, but that if the merger closes — it has a June 2023 target date — future “Call of Duty” games would be released for all platforms at once. “Once we get into the rhythm of this, our plan would be that when [a Call of Duty game] launches on PlayStation, Xbox, and PC, that it would also be available on Nintendo at the same time,” he told the Post.
Nintendo shares
7974,
+0.33%
rose slightly in Tokyo trading following the news. Microsoft shares
MSFT,
-2.03%
fell Monday, and are down 17% year to date, compared to the S&P 500’s
SPX,
-1.44%
17% decline this year.[ad_2]
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ChargePoint Results Fall Short. Guidance Is Saving the Stock.
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Shares of EV charging company
ChargePoint
have been caught in the sell off that’s hammered small-capitalization stocks that don’t produce earnings or generate free cash flow, yet. Investors hoped that third-quarter earnings could turn sentiment around, but some concerns linger.
ChargePoint
(ticker: CHPT), on Thursday afternoon, reported a per-share loss of 25 cents from $125 million in sales. Wall Street was looking for a loss of 20 cents per share on sales of $132.3 million.[ad_2]
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Salesforce co-CEO Bret Taylor leaving, stock falls after lower-than-expected forecast
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Salesforce Inc. performed better than expected in the third quarter, but executives issued a fourth-quarter forecast that fell short of expectations on Wednesday and revealed that co-Chief Executive Bret Taylor is leaving the company.
Salesforce
CRM,
+5.65%
shares fell about 7% after hours, after rising about 5.5% in the regular session to close at $159.97, their fifth gain in the past six sessions.The cloud-software company said in a news release that founder, co-CEO and Chairman Marc Benioff will resume the sole CEO role on Jan. 31. Taylor is the second executive to be elevated to co-CEO with Benioff, only to leave with Benioff still in charge. Keith Block stepped down in February 2020 after just 18 months in the position, and Taylor lasted exactly a year in the co-CEO position after being promoted Nov. 30 of last year.
“I am grateful for six fantastic years at Salesforce,” Taylor, who was also vice chairman, said in a statement. “Marc was my mentor well before I joined Salesforce and the opportunity to partner with him to lead the most important software company in the world is career-defining. After a lot of reflection, I’ve decided to return to my entrepreneurial roots.”
On the company’s earnings call, Benioff said “we’re still in a little bit of shock and extremely sad” about Taylor’s exit, but did not answer an analyst’s question about whether he would fill the co-CEO position.
At least one analyst said he didn’t see the departure coming: “Given that Mr. Taylor was assumed to be the ‘heir apparent’ at CRM, this does bring up a lot of questions in terms of the management team and frankly offsets some of the positive narrative around margins heading into [calendar year 2023],” wrote Kirk Materne, analyst for Evercore ISI, in a note Wednesday.
Salesforce reported that third-quarter net income fell to $210 million, or 21 cents a share, compared with $468 million, or 47 cents a share, in the year-ago period. Adjusted for stock-based compensation and other costs, earnings were $1.40 a share. Revenue rose to $7.84 billion from $6.86 billion in the year-ago quarter.
Analysts, who have been expressing concerns about a slowdown in business-software spending, had forecast adjusted earnings of $1.22 a share on revenue of $7.83 billion, according to FactSet.
“We remain positive on the long-term outlook for Salesforce as front-office applications leader,” Michael Turits, analyst for KeyBanc Capital Markets, wrote ahead of the company’s earnings report. “That said, we remain cautious regarding the near-term outlook given ongoing recession concerns, slowing cloud spend, and weaker conversations we had with a few Salesforce channels this quarter.”
Those concerns sprung up in the company’s forecast, as Salesforce executives’ guidance fell $900 million short of expectations. They expect fourth-quarter earnings of 23 cents to 25 cents a share on revenue in the range of $7.932 billion to $8.032 billion, and adjusted earnings of $1.35 to $1.37 a share. Analysts had forecast adjusted earnings of $1.44 a share on revenue of $8.94 billion.
Chief Financial Officer Amy Weaver said on the earnings call that along with the “unpredictable” macroeconomic environment and some slowing in customer spending, the strong dollar had an impact on the company’s showing. “Foreign exchange continued to be a headwind for our results,” she said.
Still, Weaver said the company remains committed to a goal of operating margins of 25% or above; in the third quarter it was at 22.7%, which she said was a record high. Among the things the company is doing, she said, is taking a measured approach to hiring. Earlier this month, the company confirmed hundreds of layoffs, though it did not address them during the call.
See: Tech layoffs approach Great Recession levels
In response to an analyst’s question about employees working from home and the company’s real-estate footprint, Benioff said the San Francisco-based company will have more employees in the office while maintaining the flexibility of remote work. “We’re never going back to how it was, we all know that,” he said. Meanwhile, Weaver said the company is “looking at every aspect of our real estate .”
Shares of Salesforce have declined about 37% this year. The Dow Jones Industrial Average
DJIA,
+2.18% ,
whose 30 components include Salesforce, has fallen about 5% year to date, while the S&P 500 index
SPX,
+3.09%
is down almost 15% this year.[ad_2]
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CrowdStrike stock drops nearly 20% as elongating sales cycle slows new subscriptions
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CrowdStrike Holdings Inc. shares dropped in the extended session Tuesday after the cybersecurity company said new subscriptions came in below expectations amid macro headwinds and longer customer buying cycles.
Given concern that businesses are cutting back on spending, CrowdStrike
CRWD,
-1.04%
shares plummeted nearly 20% after hours, following a 1% decline in the regular session to close at $138.George Kurtz, CrowdStrike’s co-founder and chief executive, told analysts on a conference call that the company reported $198.1 million in net new annual recurring revenue, or ARR, in the quarter, not as much as it had hoped.
ARR is a software-as-a-service metric that shows how much revenue the company can expect based on subscriptions. That grew 54% to $2.34 billion from the year-ago quarter, while the Street expected $2.35 billion. Kurtz said that about $10 million was deferred to future quarters.
“We expect these macro headwinds to persist through Q4,” Kurtz told analysts.
Burt Podbere, CrowdStrike’s chief financial officer, explained that the company relies on ARR because it’s “an X-ray into the contract sales.”
“As George mentioned, even though we entered Q2 with a record pipeline, and we are expecting the elongated sales cycles due to macro concerns to continue, we’re not expecting to see the typical Q4 budget flush given the increased scrutiny on budgets.”
Podbere said it is “prudent to assume” fourth-quarter net new ARR will be up to 10% below the third quarter’s. That would mean about a 10% year-over-year headwind going into the first half of next year, and “full-year net new ARR would be roughly flat to modestly up year over year.”
“This would imply a low 30s ending ARR growth rate and a subscription revenue growth rate in the low to mid-30s for FY 2024,” Podbere said.
Read: Cloud software is suffering a cold November rain. Can Snowflake and Salesforce turn things around?
The company expects adjusted fiscal fourth-quarter earnings of 42 cents to 45 cents a share on revenue of $619.1 million to $628.2 million, while analysts surveyed by FactSet forecast earnings of 34 cents a share on revenue of $633.9 million, according to analysts.
CrowdStrike expects full-year earnings of $1.49 to $1.52 a share on revenue of $2.22 billion to $2.23 billion. Wall Street expects $1.33 a share on revenue of $2.23 billion.
The company reported a fiscal third-quarter loss of $55 million, or 24 cents a share, compared with a loss of $50.5 million, or 22 cents a share, in the year-ago period. Adjusted net income, which excludes stock-based compensation and other items, was 40 cents a share, compared with 17 cents a share in the year-ago period.
Revenue rose to $580.9 million from $380.1 million in the year-ago quarter.
Analysts expected CrowdStrike to report earnings of 28 cents a share on revenue of $516 million, based on the company’s outlook of 30 cents to 32 cents a share on revenue of $569.1 million to $575.9 million.
So far in November, cloud software stocks have been getting trashed. While the S&P 500
SPX,
-0.16%
has gained 2%, and the tech-heavy Nasdaq Composite
COMP,
-0.59%
is flat, the iShares Expanded Tech-Software Sector ETF
IGV,
-0.78%
has fallen more than 2%, the Global X Cloud Computing ETF
CLOU,
-1.12%
has declined more than 4%, the First Trust Cloud Computing ETF
SKYY,
-0.74%
has fallen more than 6%, and the WisdomTree Cloud Computing Fund
WCLD,
-1.05%
has dropped more than 11%.[ad_2]
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20 dividend stocks with high yields that have become more attractive right now
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Income-seeking investors are looking at an opportunity to scoop up shares of real estate investment trusts. Stocks in that asset class have become more attractive as prices have fallen and cash flow is improving.
Below is a broad screen of REITs that have high dividend yields and are also expected to generate enough excess cash in 2023 to enable increases in dividend payouts.
REIT prices may turn a corner in 2023
REITs distribute most of their income to shareholders to maintain their tax-advantaged status. But the group is cyclical, with pressure on share prices when interest rates rise, as they have this year at an unprecedented scale. A slowing growth rate for the group may have also placed a drag on the stocks.
And now, with talk that the Federal Reserve may begin to temper its cycle of interest-rate increases, we may be nearing the time when REIT prices rise in anticipation of an eventual decline in interest rates. The market always looks ahead, which means long-term investors who have been waiting on the sidelines to buy higher-yielding income-oriented investments may have to make a move soon.
During an interview on Nov 28, James Bullard, president of the Federal Reserve Bank of St. Louis and a member of the Federal Open Market Committee, discussed the central bank’s cycle of interest-rate increases meant to reduce inflation.
When asked about the potential timing of the Fed’s “terminal rate” (the peak federal funds rate for this cycle), Bullard said: “Generally speaking, I have advocated that sooner is better, that you do want to get to the right level of the policy rate for the current data and the current situation.”
Fed’s Bullard says in MarketWatch interview that markets are underpricing the chance of still-higher rates
In August we published this guide to investing in REITs for income. Since the data for that article was pulled on Aug. 24, the S&P 500
SPX,
-0.29%
has declined 4% (despite a 10% rally from its 2022 closing low on Oct. 12), but the benchmark index’s real estate sector has declined 13%.REITs can be placed broadly into two categories. Mortgage REITs lend money to commercial or residential borrowers and/or invest in mortgage-backed securities, while equity REITs own property and lease it out.
The pressure on share prices can be greater for mortgage REITs, because the mortgage-lending business slows as interest rates rise. In this article we are focusing on equity REITs.
Industry numbers
The National Association of Real Estate Investment Trusts (Nareit) reported that third-quarter funds from operations (FFO) for U.S.-listed equity REITs were up 14% from a year earlier. To put that number in context, the year-over-year growth rate of quarterly FFO has been slowing — it was 35% a year ago. And the third-quarter FFO increase compares to a 23% increase in earnings per share for the S&P 500 from a year earlier, according to FactSet.
The NAREIT report breaks out numbers for 12 categories of equity REITs, and there is great variance in the growth numbers, as you can see here.
FFO is a non-GAAP measure that is commonly used to gauge REITs’ capacity for paying dividends. It adds amortization and depreciation (noncash items) back to earnings, while excluding gains on the sale of property. Adjusted funds from operations (AFFO) goes further, netting out expected capital expenditures to maintain the quality of property investments.
The slowing FFO growth numbers point to the importance of looking at REITs individually, to see if expected cash flow is sufficient to cover dividend payments.
Screen of high-yielding equity REITs
For 2022 through Nov. 28, the S&P 500 has declined 17%, while the real estate sector has fallen 27%, excluding dividends.
Over the very long term, through interest-rate cycles and the liquidity-driven bull market that ended this year, equity REITs have fared well, with an average annual return of 9.3% for 20 years, compared to an average return of 9.6% for the S&P 500, both with dividends reinvested, according to FactSet.
This performance might surprise some investors, when considering the REITs’ income focus and the S&P 500’s heavy weighting for rapidly growing technology companies.
For a broad screen of equity REITs, we began with the Russell 3000 Index
RUA,
-0.04% ,
which represents 98% of U.S. companies by market capitalization.We then narrowed the list to 119 equity REITs that are followed by at least five analysts covered by FactSet for which AFFO estimates are available.
If we divide the expected 2023 AFFO by the current share price, we have an estimated AFFO yield, which can be compared with the current dividend yield to see if there is expected “headroom” for dividend increases.
For example, if we look at Vornado Realty Trust
VNO,
+1.03% ,
the current dividend yield is 8.56%. Based on the consensus 2023 AFFO estimate among analysts polled by FactSet, the expected AFFO yield is only 7.25%. This doesn’t mean that Vornado will cut its dividend and it doesn’t even mean the company won’t raise its payout next year. But it might make it less likely to do so.Among the 119 equity REITs, 104 have expected 2023 AFFO headroom of at least 1.00%.
Here are the 20 equity REITs from our screen with the highest current dividend yields that have at least 1% expected AFFO headroom:
Company Ticker Dividend yield Estimated 2023 AFFO yield Estimated “headroom” Market cap. ($mil) Main concentration Brandywine Realty Trust BDN,
+2.12% 11.52% 12.82% 1.30% $1,132 Offices Sabra Health Care REIT Inc. SBRA,
+2.41% 9.70% 12.04% 2.34% $2,857 Health care Medical Properties Trust Inc. MPW,
+2.53% 9.18% 11.46% 2.29% $7,559 Health care SL Green Realty Corp. SLG,
+2.25% 9.16% 10.43% 1.28% $2,619 Offices Hudson Pacific Properties Inc. HPP,
+1.41% 9.12% 12.69% 3.57% $1,546 Offices Omega Healthcare Investors Inc. OHI,
+1.23% 9.05% 10.13% 1.08% $6,936 Health care Global Medical REIT Inc. GMRE,
+2.55% 8.75% 10.59% 1.84% $629 Health care Uniti Group Inc. UNIT,
+0.55% 8.30% 25.00% 16.70% $1,715 Communications infrastructure EPR Properties EPR,
+0.86% 8.19% 12.24% 4.05% $3,023 Leisure properties CTO Realty Growth Inc. CTO,
+2.22% 7.51% 9.34% 1.83% $381 Retail Highwoods Properties Inc. HIW,
+0.99% 6.95% 8.82% 1.86% $3,025 Offices National Health Investors Inc. NHI,
+2.59% 6.75% 8.32% 1.57% $2,313 Senior housing Douglas Emmett Inc. DEI,
+0.87% 6.74% 10.30% 3.55% $2,920 Offices Outfront Media Inc. OUT,
+0.89% 6.68% 11.74% 5.06% $2,950 Billboards Spirit Realty Capital Inc. SRC,
+1.15% 6.62% 9.07% 2.45% $5,595 Retail Broadstone Net Lease Inc. BNL,
-0.30% 6.61% 8.70% 2.08% $2,879 Industial Armada Hoffler Properties Inc. AHH,
+0.00% 6.38% 7.78% 1.41% $807 Offices Innovative Industrial Properties Inc. IIPR,
+1.42% 6.24% 7.53% 1.29% $3,226 Health care Simon Property Group Inc. SPG,
+1.03% 6.22% 9.55% 3.33% $37,847 Retail LTC Properties Inc. LTC,
+1.42% 5.99% 7.60% 1.60% $1,541 Senior housing Source: FactSet Click on the tickers for more about each company. You should read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.
The list includes each REIT’s main property investment type. However, many REITs are highly diversified. The simplified categories on the table may not cover all of their investment properties.
Knowing what a REIT invests in is part of the research you should do on your own before buying any individual stock. For arbitrary examples, some investors may wish to steer clear of exposure to certain areas of retail or hotels, or they may favor health-care properties.
Largest REITs
Several of the REITs that passed the screen have relatively small market capitalizations. You might be curious to see how the most widely held REITs fared in the screen. So here’s another list of the 20 largest U.S. REITs among the 119 that passed the first cut, sorted by market cap as of Nov. 28:
Company Ticker Dividend yield Estimated 2023 AFFO yield Estimated “headroom” Market cap. ($mil) Main concentration Prologis Inc. PLD,
+1.63% 2.84% 4.36% 1.52% $102,886 Warehouses and logistics American Tower Corp. AMT,
+0.75% 2.66% 4.82% 2.16% $99,593 Communications infrastructure Equinix Inc. EQIX,
+0.80% 1.87% 4.79% 2.91% $61,317 Data centers Crown Castle Inc. CCI,
+0.93% 4.55% 5.42% 0.86% $59,553 Wireless Infrastructure Public Storage PSA,
+0.19% 2.77% 5.35% 2.57% $50,680 Self-storage Realty Income Corp. O,
+0.72% 4.82% 6.46% 1.64% $38,720 Retail Simon Property Group Inc. SPG,
+1.03% 6.22% 9.55% 3.33% $37,847 Retail VICI Properties Inc. VICI,
+0.81% 4.69% 6.21% 1.52% $32,013 Leisure properties SBA Communications Corp. Class A SBAC,
+0.27% 0.97% 4.33% 3.36% $31,662 Communications infrastructure Welltower Inc. WELL,
+3.06% 3.66% 4.76% 1.10% $31,489 Health care Digital Realty Trust Inc. DLR,
+0.63% 4.54% 6.18% 1.64% $30,903 Data centers Alexandria Real Estate Equities Inc. ARE,
+1.49% 3.17% 4.87% 1.70% $24,451 Offices AvalonBay Communities Inc. AVB,
+0.98% 3.78% 5.69% 1.90% $23,513 Multifamily residential Equity Residential EQR,
+1.46% 4.02% 5.36% 1.34% $23,503 Multifamily residential Extra Space Storage Inc. EXR,
+0.31% 3.93% 5.83% 1.90% $20,430 Self-storage Invitation Homes Inc. INVH,
+2.15% 2.84% 5.12% 2.28% $18,948 Single-family residental Mid-America Apartment Communities Inc. MAA,
+1.83% 3.16% 5.18% 2.02% $18,260 Multifamily residential Ventas Inc. VTR,
+2.22% 4.07% 5.95% 1.88% $17,660 Senior housing Sun Communities Inc. SUI,
+2.12% 2.51% 4.81% 2.30% $17,346 Multifamily residential Source: FactSet Simon Property Group Inc.
SPG,
+1.03%
is the only REIT to make both lists.[ad_2]
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Crypto lender BlockFi is suing Sam Bankman-Fried over his shares in Robinhood: report
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Just hours after filing for Chapter 11 bankruptcy in New Jersey on Monday, cryptocurrency lender BlockFi filed a lawsuit against a holding company by FTX founder Sam Bankman-Fried over his shares in trading platform Robinhood, the Financial Times reported.
The suit was filed against Bankman-Fried’s vehicle Emergent Fidelity Technologies, of whom BlockFi is seeking to recover unpaid collateral.
The filing – also lodged in New Jersey – says BlockFi entered into a pledge agreement with Emergent on Nov. 9 stating that an unnamed borrower was obliged to pledge “certain shares of common stock” and has breached the agreement by failing to comply with its payment obligations.
The Financial Times reports the collateral in question is Bankman-Fried’s 7.6% stake in Robinhood which he bought earlier this year.
“Emergent has defaulted on its obligations under the pledge agreement and failed to satisfy its obligations thereunder despite written notice of default and acceleration,” the lawsuit filing says.
The lawsuit also named London-based brokerage ED&F Man Capital Markets for refusing to “transfer the collateral” to BlockFi.
“This is a highly complex matter,” a spokesperson for ED&F Man Capital Markets told MarketWatch in an emailed statement.
“We cannot comment on matters that are subject to legal proceedings but will of course comply with any direction given by the judge,” they added.
On Monday, BlockFi, who was once valued at $3 billion, filed for bankruptcy protection after becoming the latest company to be pushed over the edge from the collapse of crypto exchange FTX.
See also: BlockFi’s big creditors include an indenture trustee firm, FTX and the SEC
The lawsuit is the latest headache for Bankman-Fried, who is already the subject of a number of investigations in the U.S. and the Bahamas – where FTX was based. The downfall of FTX has triggered a chain reaction of crypto-casualties including crypto financial-services firm Genesis.
FTX collapse to be focus of Senate hearing Thursday — here’s what to watch for
BlockFi and representatives of Bankman-Fried did not immediately respond to MarketWatch’s request for comment.
See also: Bitcoin prices under pressure as cracks spread across crypto industry
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Nestle lifts guidances, confirms plan to buy back $21 billion shares over 2022-24
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Nestle SA has lifted its full-year organic sales-growth guidance and outlined targets for 2025 ahead of its investor seminar on Tuesday.
The Swiss packaged-foods giant
NSRGY,
+0.11% NESN,
-0.26%
said it now expects sales to grow organically between 8% and 8.5% from previous expectations of around 8%. The underlying trading operating profit margin is still seen at around 17%.By 2025, it expects to return to an underlying trading operating profit margin in the range of 17.5% to 18.5%, following the margin impact of cost inflation in 2021 and 2022.
Annual underlying earnings-per-share growth is seen between 6% and 10% in constant currency over the 2022-25 period, Nestle said. The company aims for free cash flow toward 12% of sales, and return on invested capital of 15% by 2025.
In terms of portfolio management, it said it will explore strategic options for peanut allergy treatment Palforzia, following slower than expected adoption by patients and heathcare professionals. The review should be completed in the first half of next year.
Nestle said the health-science business will focus more on consumer care and medical nutrition.
The company confirmed its program to repurchase 20 billion Swiss francs ($21.14 billion) of its shares between 2022 and 2024 and said it aims to keep increasing its dividend year on year.
Write to Giulia Petroni at giulia.petroni@wsj.com
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Top Disney exec Kareem Daniel to leave as Bob Iger returns
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Kareem Daniel, the chairman of Walt Disney Co.’s vast media and entertainment distribution segment, is leaving the company as part of an organizational reshuffling that comes a day after Robert Iger returned as chief executive, according to a company note to employees viewed by MarketWatch.
The move marks the departure of one of the top executives appointed under former CEO Bob Chapek, who was ousted Sunday as a part of Iger’s appointment to the top role. Chapek took over for Iger as Disney
DIS,
+6.30%
CEO in 2020.Iger, in the memo, said Disney would soon begin “organizational and operating changes” to save on costs and, he said, give creative teams more influence.
“I’ve asked Dana Walden, Alan Bergman, Jimmy Pitaro, and Christine McCarthy to work together on the design of a new structure that puts more decision-making back in the hands of our creative teams and rationalizes costs, and this will necessitate a reorganization of Disney Media & Entertainment Distribution,” Iger said in the memo.
“As a result, Kareem Daniel will be leaving the company, and I hope you will all join me in thanking him for his many years of service to Disney,” the memo continued.
Iger said his goal was to have a new structure for Disney in place “in the coming months.” He said the company would share more information “over the coming weeks.”
Disney shares were largely unchanged after hours. They rose 6.3% to $97.58 in the regular session, the stock’s best day since Dec. 11, 2020.
The media and entertainment distribution division covers all of its film and TV production and distribution — including channels like ABC and ESPN as well as streaming services like Disney+. The division also handles content sales and licensing duties. Chapek created the new corporate structure not long after he took the helm in an effort to lean more on streaming.
Iger returned to the helm after Disney executives forecast slower sales growth in the coming year, following a quarter in which a smaller slate of theatrical releases weighed on content sales, and softer results in its parks and media segments.
According to a filing with the Securities and Exchange Commission earlier in the day, Iger’s contract runs through Dec. 31, 2024 and gives him an annual base salary of $1 million, as well as a yearly bonus of up to $1 million in cash and $25 million in stock.
Opinion: ‘Steve Jobs Syndrome’ strikes as Disney brings back Bob Iger, but history is not on their side
He will also serve as a director on Disney’s board until the company’s 2023 annual meeting. The filing said the company “exercised its right to terminate without cause the employment of Robert A. Chapek as Chief Executive Office.” Chapek also resigned from the board.
Iger was previously CEO of Disney from 2005 to February 2020.
Disney stock has plummeted 37% so far this year. The S&P 500 index
SPX,
-0.39%
has fallen 17% over that time.[ad_2]
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Disney shocker: Bob Iger to return as CEO, Bob Chapek ousted
[ad_1]
In a stunning reversal, the Walt Disney Co.
DIS,
+0.38%
announced Sunday night that Chief Executive Bob Chapek was out, and will be replaced by his predecessor, Robert Iger.“We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic,” board chair Susan Arnold said in a statement. “The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period.”
Iger served as Disney’s CEO from 2005-’20, and served as executive chairman and chairman of the board through 2021. Over his 15-year tenure as CEO, Disney rebuilt itself as a media powerhouse, with the acquisitions of Pixar, Marvel, Lucasfilm and its “Star Wars” properties, and 21st Century Fox.
“Mr. Iger has the deep respect of Disney’s senior leadership team, most of whom he worked closely with until his departure as executive chairman 11 months ago, and he is greatly admired by Disney employees worldwide — all of which will allow for a seamless transition of leadership,” Arnold said in the statement.
Disney’s shares jumped 8% in premarket trade to $99.10.
Disney shares have fallen about 11% since June, and are down 41% year to date, compared to the 5% decline this year by the Dow Jones Industrial Average
DJIA,
+0.59% ,
of which it is a component.Disney made clear that Iger’s return will be temporary — two years, with a mandate from the board to set a new strategic direction and develop a successor.
“Wow,” Wedbush analyst Dan Ives said in a tweet Sunday night. “Iger had golden touch at Disney,” he said, adding that his return is a “major strategic move with ramifications across the media and streaming industry looking ahead.”
Iger announced he was stepping down as CEO in February 2020, with Disney saying at the time he would continue to “direct the company’s creative endeavors.”
Earlier this month, Disney stock suffered its worst day since 2001 following what one analyst termed a “massive earnings downgrade,” after the company in its fourth-quarter earnings report forecast significantly softer-than-expected, single-digit growth in the coming fiscal year, far below analysts’ consensus view of 25% growth.
That was all despite Disney’s best year for revenue growth in more than 25 years. Disney’s theme parks grew steadily in the third year of the COVID-19 pandemic, but its largest business segment, media and entertainment distribution, suffered a sharp drop in sales. And while the Disney+ streaming service is rapidly growing, it’s still a money-loser. The service will add a cheaper, advertising-supported tier in December in a bid to increase revenue.
Earlier this month, the Wall Street Journal reported Disney’s companywide plans to cut costs, including a near ban on business travel, a hiring freeze and likely layoffs. “We are going to have to make tough and uncomfortable decisions,” Chapek reportedly said in an internal memo.
Earlier this year, Chapek widely criticized for Disney’s response to Florida’s new “Don’t Say Gay” law. After at first saying Disney would stay out of the political fight, he finally expressed his concerns to Florida Gov. Ron DeSantis and pledged millions to LGBTQ+ causes and paused the company’s political donations in Florida. That drew harsh backlash from conservatives, while many Disney employees participated in walkouts to protest what they said was Chapek’s slow and lackluster response. Chapek apologized to employees, saying “I let you down.”
This past June, Disney extended Chapek’s contract for another three years, with Arnold calling Chapek “the right leader at the right time,” and saying he had the board’s “full confidence.”
Controversial decisions
While Iger was long seen as a champion of creatives, Chapek chafed many at Disney with his decisions, including one to stream new movies on Disney+ the same day they hit theaters — which drew a 2021 lawsuit from actress Scarlett Johansson, who claimed the decision “cheated” her out of millions of dollars in earnings. (The suit was later settled.)
In March, CNBC reported that Iger and Chapek — his handpicked successor — had had a falling out and rarely spoke anymore, and that there was significant internal tension caused by Chapek making key decisions about Disney’s future without Iger’s input. “It was extremely awkward,” one source told CNBC.
Earlier this year in a podcast with Kara Swisher, Iger dismissed “ridiculous” rumors that he might return to lead Disney, saying “You can’t go home again.”
But in a statement Sunday night, Iger said he was “thrilled” to return.
“I am extremely optimistic for the future of this great company and thrilled to be asked by the Board to return as its CEO,” Iger said. “Disney and its incomparable brands and franchises hold a special place in the hearts of so many people around the globe — most especially in the hearts of our employees, whose dedication to this company and its mission is an inspiration. I am deeply honored to be asked to again lead this remarkable team, with a clear mission focused on creative excellence to inspire generations through unrivaled, bold storytelling.”
Kutgun Maral, analyst at RBC Capital Markets, said Iger was “easily” one of the most well-respected executives across its coverage, but the change in leadership has created uncertainty with the company’s big strategy shifts ahead.
“While we certainly have a positive bias over the long-term opportunity, the near- to medium-term implications to shares will depend on what path Iger will take to deliver on his mandate for ‘renewed growth,’” he said.
“We note that his term is only for two years, and it might be difficult to execute against a wide-ranging set of initiatives on top of also managing the murky macro backdrop and supporting work on succession planning,” he added.
— Anviksha Patel contributed to this report
[ad_2]
-
Disney shocker: Bob Iger to return as CEO, Bob Chapek ousted
[ad_1]
In a stunning reversal, the Walt Disney Co.
DIS,
+0.38%
announced Sunday night that Chief Executive Bob Chapek was out, and will be replaced by his predecessor, Robert Iger.“We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic,” board chair Susan Arnold said in a statement. “The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period.”
Iger served as Disney’s CEO from 2005-’20, and served as executive chairman and chairman of the board through 2021. Over his 15-year tenure as CEO, Disney rebuilt itself as a media powerhouse, with the acquisitions of Pixar, Marvel, Lucasfilm and its “Star Wars” properties, and 21st Century Fox.
“Mr. Iger has the deep respect of Disney’s senior leadership team, most of whom he worked closely with until his departure as executive chairman 11 months ago, and he is greatly admired by Disney employees worldwide — all of which will allow for a seamless transition of leadership,” Arnold said in the statement.
Disney made clear that Iger’s return will be temporary — two years, with a mandate from the board to set a new strategic direction and develop a successor.
“Wow,” Wedbush analyst Dan Ives said in a tweet Sunday night. “Iger had golden touch at Disney,” he said, adding that his return is a “major strategic move with ramifications across the media and streaming industry looking ahead.”
Iger announced he was stepping down as CEO in February 2020, with Disney saying at the time he would continue to “direct the company’s creative endeavors.”
Earlier this month, Disney stock suffered its worst day since 2001 following what one analyst termed a “massive earnings downgrade,” after the company in its fourth-quarter earnings report forecast significantly softer-than-expected, single-digit growth in the coming fiscal year, far below analysts’ consensus view of 25% growth.
That was all despite Disney’s best year for revenue growth in more than 25 years. Disney’s theme parks grew steadily in the third year of the COVID-19 pandemic, but its largest business segment, media and entertainment distribution, suffered a sharp drop in sales. And while the Disney+ streaming service is rapidly growing, it’s still a money-loser. The service will add a cheaper, advertising-supported tier in December in a bid to increase revenue.
Earlier this month, the Wall Street Journal reported Disney’s companywide plans to cut costs, including a near ban on business travel, a hiring freeze and likely layoffs. “We are going to have to make tough and uncomfortable decisions,” Chapek reportedly said in an internal memo.
Earlier this year, Chapek widely criticized for Disney’s response to Florida’s new “Don’t Say Gay” law. After at first saying Disney would stay out of the political fight, he finally expressed his concerns to Florida Gov. Ron DeSantis and pledged millions to LGBTQ+ causes and paused the company’s political donations in Florida. That drew harsh backlash from conservatives, while many Disney employees participated in walkouts to protest what they said was Chapek’s slow and lackluster response. Chapek apologized to employees, saying “I let you down.”
This past June, Disney extended Chapek’s contract for another three years, with Arnold calling Chapek “the right leader at the right time,” and saying he had the board’s “full confidence.”
Disney shares have fallen about 10% since June, and are down 38% year to date, compared to the 5% decline this year by the Dow Jones Industrial Average
DJIA,
+0.59% ,
of which it is a component.While Iger was long seen as a champion of creatives, Chapek chafed many at Disney with his decisions, including one to stream new movies on Disney+ the same day they hit theaters — which drew a 2021 lawsuit from actress Scarlett Johansson, who claimed the decision “cheated” her out of millions of dollars in earnings. (The suit was later settled.)
In March, CNBC reported that Iger and Chapek — his handpicked successor — had had a falling out and rarely spoke anymore, and that there was significant internal tension caused by Chapek making key decisions about Disney’s future without Iger’s input. “It was extremely awkward,” one source told CNBC.
Earlier this year in a podcast with Kara Swisher, Iger dismissed “ridiculous” rumors that he might return to lead Disney, saying “You can’t go home again.”
But in a statement Sunday night, Iger said he was “thrilled” to return.
“I am extremely optimistic for the future of this great company and thrilled to be asked by the Board to return as its CEO,” Iger said. “Disney and its incomparable brands and franchises hold a special place in the hearts of so many people around the globe — most especially in the hearts of our employees, whose dedication to this company and its mission is an inspiration. I am deeply honored to be asked to again lead this remarkable team, with a clear mission focused on creative excellence to inspire generations through unrivaled, bold storytelling.”
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