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Disney CEO Robert Iger at Town Hall Vows to Focus on Creativity
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Tag: Senior Level Management
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Barclays CEO C.S. Venkatakrishnan Diagnosed With Non-Hodgkin Lymphoma
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By Joe Hoppe
Barclays PLC said Monday that Chief Executive Officer C.S. Venkatakrishnan has been diagnosed with non-Hodgkin lymphoma, with treatment expected to last 12 to 16 weeks.
The FTSE 100-listed bank said the cancer has been detected early and the prognosis is good. Mr. Venkatakrishnan will continue to actively manage the company during the treatment period.
Write to Joe Hoppe at joseph.hoppe@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
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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
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Disney shocker: Bob Iger to return as CEO, Bob Chapek ousted
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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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Amazon CEO says more layoffs are coming in 2023
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Amazon.com Inc. plans more layoffs, but employees will have to wait until 2023 to see if their jobs are affected.
Chief Executive Andy Jassy said Thursday that while Amazon
AMZN,
-2.34%
already confirmed that it was eliminating jobs in its devices and books businesses, an unknown number of layoffs impacting other teams are still to follow.See more: Amazon confirms layoffs, becoming latest tech powerhouse to slash roles
“Our annual planning process extends into the new year, which means there will be more role reductions as leaders continue to make adjustments,” he said in a blog post on the company’s corporate site. “Those decisions will be shared with impacted employees and organizations early in 2023.”
While Jassy doesn’t know “exactly how many other roles will be impacted,” he does know “that there will be reductions in our Stores and PXT organizations.” The company already announced a “voluntary reduction offer for some employees” working in PXT, or People Experience and Technology Solutions.
The Wall Street Journal reported earlier this week that Amazon could end up slashing 10,000 jobs.
Jassy took over as Amazon’s CEO in July 2021 and said Thursday that “without a doubt,” the move to cut staff is “the most difficult decision we’ve made” since he’s been in the role.
“It’s not lost on me or any of the leaders who make these decisions that these aren’t just roles we’re eliminating, but rather, people with emotions, ambitions and responsibilities whose lives will be impacted,” Jassy said.
He added that Amazon “has weathered uncertainty and difficult economies in the past, and we will continue to do so.” Jassy emphasized that Amazon will continue to plug away on more established areas like stores, advertising and cloud computing, as well as newer initiatives like Prime Video, the Alexa voice assistant and healthcare.
Amazon joins other technology companies including Meta Platforms Inc.
META,
-1.57% ,
Snap Inc.
SNAP,
-1.36% ,
Shopify Inc.
SHOP,
-2.05%
and Twitter in recently eliminating jobs. An activist investor earlier this week urged Alphabet Inc.
GOOG,
-0.49% GOOGL,
-0.50%
to cut positions as well.See more: Here are the companies in the layoffs spotlight
Shares of Amazon were up 0.3% in after-hours trading Thursday after declining 2.3% in the regular session.
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Visa CEO Al Kelly to step down from that role in February
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Visa Inc. Chief Executive Al Kelly plans to step down from that role in February, to be replaced by Ryan McInerney, the company’s current president and a veteran of the payments giant for nearly a decade.
Kelly, who’s been with Visa
V,
+0.40%
in the CEO role since late 2016, said the timing of the change was right for him in a number of ways, as he’s soon to turn 65 and has a “lot of energy” to move into the next chapter of his life. He plans to embrace both his role as a grandfather and to continue to serve Visa through an executive chairman position on the company’s board of directors.After working with McInerney for the past six years, Kelly sees him as a worthy successor.
“He is ready to be the CEO of this company,” Kelly told MarketWatch. “He’s a phenomenal executive. He has the ability to be extraordinarily strategic and he’s also an incredibly thoughtful, get-in-the-weeds problem solver.”
Under Kelly’s tenure thus far as CEO, Visa’s market value has increased to $437 billion from $181 billion, while its stock gained 173%.
He is nearing his 65th birthday next year, as is Visa, based on a popular understanding of the company’s origins.
Visa framed the transition as reflective of “the board’s very well-established and thoughtful succession plan,” according to comments from John Lundgren, the board’s lead independent director, in a press release.
“We see this announcement as part of a planned succession and do not think it will be a surprise to investors,” RBC Capital Markets analyst Daniel Perlin wrote in a note to clients.
McInerney has been responsible for Visa’s global businesses in his role as president, looking over the company’s product team and merchant team, among others. He’s been with Visa for almost a decade and sees “huge opportunity over the next 10 years” in areas like business-to-business transactions, government-to-consumer disbursements, and other payment functions that are newer to Visa.
In both emerging and developed markets, he told MarketWatch he sees the potential for an “amazing digitalization of what we call ‘new payment flows.’”
McInerney views Visa founder Dee Hock, who died over the summer at 93, as an “inspiration. Hock was “one of the original disruptors” who “saw things so far in the future that people couldn’t really imagine,” he said.
See also: He saved credit cards, and now he’s inspiring crypto enthusiasts
Kelly, who is staying on the company’s board, said he “will not be involved in the day-to-day running of the company,” but that he will be there to serve as a helper and adviser “for as long as it’s valuable to Ryan and his executive team.”
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‘This situation is unprecedented’: 10 crazy things detailed in FTX’s bankruptcy filing
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On Thursday, John Ray, III, the new CEO of FTX, dropped a long-awaited declaration in U.S. bankruptcy court, giving a sober assessment of the collapse of Sam Bankman-Fried’s crypto empire. The bankruptcy-court filing followed a whirlwind of events, including the publication of explosive texts Bankman-Fried sent to a Vox reporter earlier this week.
Ray set the tone for what he has found since FTX filed for bankruptcy protection last week, citing his 40 years of experience in the legal and restructuring business, including a role as chief restructuring officer and CEO of Enron, one of the biggest corporate collapses ever.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray wrote. “This situation is unprecedented.”
Here are 10 revelations that Ray made in federal bankruptcy court on Thursday about Bankman-Fried and the FTX debacle he created.
1. Most of FTX’s digital assets have not been secured
As of Thursday, Ray made clear that while he now controls the various FTX trading and exchange platforms and Bankman-Fried’s crypto hedge fund Alameda Research, he’d “located and secured only a fraction of the digital assets” he hoped to recover. In fact, Ray said only some $740 million of cryptocurrency had been secured in new cold wallets. Ray cited at least $372 million of unauthorized transfers that had taken place on the day FTX and Alameda filed for bankruptcy last week, and the “dilutive ‘minting’ of approximately $300 million in FTT tokens by an unauthorized source” in the days after the filing. FTT tokens were created by FTX to facilitate trading on its exchange and made up a big chunk of Alameda’s assets.
2. Nobody knows who the biggest customer creditors are of FTX.
FTX.com and FTX.US had customers around the world who used its cryptocurrency exchanges and platforms. But Ray said he was unable to create a list of FTX’s top 50 creditors that included customers.
3. Alameda Research loaned $4.1 billion out to entities, including Bankman-Fried and his closest partners.
There have been reports that FTX lent out billions of dollars in customer funds to Bankman-Fried’s hedge fund, Alameda Research. But on Thursday, Ray revealed that Alameda had made $4.1 billion of related-party loans that remained outstanding at the end of September. This included a $1 billion loan Alameda made to Bankman-Fried himself, a $543 million loan made to FTX cofounder Nishad Singh, and $55 million borrowed by FTX co-CEO Ryan Salame.
4. FTX corporate funds were used to buy personal homes
Bankman-Fried lived in a luxury resort in the Bahamas, where FTX was also based. There, bankruptcy filings say, corporate funds of FTX “were used to purchase homes and other personal items for employees and advisors.” Ray said in his filing that there is no documentation for the transactions and loans associated with these real estate purchases, which were recorded in the personal name of employees and advisors.
5. Personalized emojis to approve disbursements
To demonstrate the lack of disbursement and appropriate business controls at FTX, Ray pointed out that FTX employees “submitted payment requests through an on-line ‘chat’ platform where a disparate group of supervisors approved disbursements by responding with personalized emojis.”
6. Alameda Research was one of the world’s biggest hedge funds
According to the bankruptcy filing, Alameda’s balance sheet showed $13.46 billion in total assets as of the end of September. That’s roughly equivalent to the assets managed by famous billionaire hedge fund traders like Bill Ackman, Paul Tudor Jones and Jeffrey Talpins.
7. Audit opinions from the metaverse
Bankman-Fried secured audit opinions for the international FTX trading platform part of his business from Prager Metis, a firm that Ray had never heard of before. Ray said he went to the firm’s website to learn more about it and discovered that Prager Metis described itself as the“first-ever CPA firm to officially open its Metaverse headquarters in the metaverse platform Decentraland.”
8. Alameda had a secret exemption on FTX.com
Ray’s filing on Thursday indicated that Bankman-Fried’s Alameda hedge fund might have had a trading edge on the FTX.com trading platform. According to the filing, Alameda had a “secret exemption” from “certain aspects of FTX.com’s auto-liquidation protocol.”
9. Customer liabilities are not reflected in FTX financial statements
Ray expects that the FTX.US exchange and trading platform, which serviced American customers, will have “significant liabilities arising from crypto assets deposited by customers through the FTX US platform.” He believes the FTX exchange that was used by FTX clients outside the U.S. could also have significant client liabilities. But none of these liabilities are reflected in the financial statements that were prepared while Bankman-Fried ran FTX, Ray said.
10. Ray has no confidence in any FTX balance sheet
Time and again in the filing, Ray offers the same disclaimer after detailing FTX-related financial statements. He notes that many of the balance sheets at FTX and Alameda are unaudited, and that because they were produced while Bankman-Fried ran and controlled the company, “I do not have confidence in it.”
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FTX’s Sam Bankman-Fried: ‘I was shocked to see things unravel the way they did’
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Sam Bankman-Fried, co-founder at crypto exchange FTX, tweeted Friday that he was “shocked to see things unravel the way they did,” after he quit as chief executive and the company and its related entities filed for bankruptcy.
The bankruptcy “doesn’t necessarily have to mean the end for the companies or their ability to provide value and funds to their customers chiefly, and can be consistent with other routes,” Bankman-Fried tweeted Friday.
Bankman-Fried has seen his net worth plunge to almost zero from $16 billion in less than a week, according to Bloomberg Billionaires index.
FTX was once the third largest cryptocurrency exchange by trading volume. Bitcoin
BTCUSD,
+0.10%
fell 3.4% Friday to around $16,838, hovering at around a two-year low, according to the CoinDesk data.A representative at FTX didn’t respond to a request seeking comment.
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WSJ News Exclusive | Meta’s Mark Zuckerberg Says He Is Accountable as Company Preps for Mass Layoffs
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[ad_2]Layoffs are to begin on Wednesday morning, the CEO told hundreds of executives on Tuesday
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Atlassian stock suffers worst day ever, nearly $13 billion in valuation wiped away
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Atlassian Corp. shares dropped nearly 30% Friday, after the business-collaboration software company’s earnings and revenue outlook fell short of Wall Street expectations and executives described signs of economic weakness taking hold.
Atlassian
TEAM,
-28.96%
shares plummeted to an intraday low of $117.11 in Friday trading, nearly 33% lower than Thursday’s closing price and the lowest price for Atlassian stock since March of 2020. At the close, shares were trading for $123.73, a 29% descent that is easily the worst daily percentage decline on record for Atlassian stock — the previous mark was a 15.9% decline on Feb. 5, 2016.Atlassian — known for software programs such as Jira — was worth roughly $44 billion at its closing price Thursday, so Friday’s decline represented a loss of nearly $13 billion in market capitalization, $12.86 billion to be exact. Atlassian shares had already declined 54.3% so far this year as of Thursday’s close, while the S&P 500 index
SPX,
+1.36%
declined 21.1%.Atlassian executives forecast revenue of $835 million to $855 million for their fiscal second quarter, while analysts expected $879.3 million on average, according to FactSet. Executives also decreased their revenue guidance for the full year, without providing a specific figure for overall annual revenue; instead, they gave color in a letter to shareholders about the different revenue segments within the company.
In that letter to shareholders, Atlassian’s co-chief executives and co-founders, Mike Cannon-Brooks and Scoot Farquhar, said that the company tracked slower conversions from free to paid subscriptions for its “freemium” software, and slower growth from its paying customers in the quarter.
“The above two trends are the result of companies tightening their belts and slowing their pace of hiring. In other words, Atlassian is not immune to broader macroeconomic impacts,” they wrote. “Our outlook assumes these trends will persist, but we’ll monitor, respond and keep you updated accordingly.”
“We will focus our investments on strengthening our market position and scooping up top-tier talent in this environment. But we will balance these investments with the growth of our business and be responsive to the macroeconomic conditions,” they continued. “So while we’re lowering our revenue outlook for FY23 based on macroeconomic headwinds, we are maintaining our midteens % operating margin outlook for the year.”
Chief Financial Officer Joe Binz detailed planned cost cuts and a hiring slowdown in response during a conference call Thursday afternoon.
“First and foremost, we’re making reductions in our non-head count-driven discretionary spending,” he said in response to an analyst’s question. “And then, secondarily, we’ll be moderating the rate of planned head count growth in the second half of FY 2023.”
Executives reported a fiscal first-quarter loss of $13.7 million, or 5 cents a share, compared with a loss of $411.2 million, or $1.63 a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were 36 cents a share, compared with 37 cents a share in the year-ago period.
Revenue rose to $807.4 million from $614 million in the year-ago quarter. Analysts surveyed by FactSet had forecast adjusted earnings of 40 cents a share on revenue of $806.3 million.
“These results came as a bit of a shock, and are frankly something we thought we’d never see from a high-performing company like TEAM that also possesses a unique value proposition and business model,” Mizuho analysts wrote while chopping their price target on the stock to $255 from $320 but maintaining a “Buy” rating on the stock.
“Despite the big setback, we believe TEAM is likely to be one of the biggest
winners once the macro environment improves,” they wrote. “Why? Most notably, we would highlight a very strong competitive position in the important DevOps market, a still vibrant top-of-funnel (35K net new paid customers added over the LTM), a multiyear cloud migration catalyst, and meaningful pricing power as key growth drivers.”[ad_2]
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Tim Cook has been an excellent leader for Apple — these numbers prove it
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How good is a company’s chief executive officer at investing your money most efficiently? This is an important question for long-term investors. It may underline the difference between a steady long-term performer and a flash in the pan.
And Apple Inc.
AAPL,
-4.24%
now makes up 7% of the SPDR S&P 500 ETF Trust
SPY,
-1.03% ,
the first and largest exchange-traded fund (with $360 billion in assets), which tracks the benchmark S&P 500
SPX,
-1.06% .
That’s close to an all-time record, and the iPhone maker has a whopping 14.1% position in the Invesco QQQ Trust
QQQ,
-1.95% ,
which tracks the Nasdaq-100 Index
NDX,
-1.98% .
Looking at the full Nasdaq Index
COMP,
-1.73% ,
which has 3,747 stocks, Apple takes a 13.5% position.Apple now makes up 7.3% of the S&P 500 by market capitalization, close to the 8% record it set late in September.
FactSet
This is very much an Apple stock market, with the company topping the broad indexes that are weighted by market capitalization. You are likely to be invested in the company indirectly. You also might be feeling Apple’s impact in other ways. Apple’s App Store ecosystem drives more than $600 billion in annual revenue for developers.
Tim Cook’s tenure as Apple’s CEO has been nothing short of breathtaking when measured by the company’s financial performance. Apple is not one of the fastest-growing companies when measured by sales or earnings — it is too big for that. But its excellent stock performance has reflected Cook’s ability to deploy invested capital with improving efficiency. Cook has also been a market trendsetter in other important ways. He has Apple repurchasing $90 billion of its shares annually, setting the pace for stock buybacks in the market. Cook’s steady hand has also helped Apple withstand the market’s tech wreck and remain a stable pillar for the teetering Nasdaq Composite index generally. For all these reasons, Cook has earned a spot on the MarketWatch 50 list of the most influential people in markets.
Apple keeps improving by this important measure
Investors in the stock market are looking for growth over the long term. The best measure of that is whether or not a company’s share price goes up or down. But Cook isn’t just managing Apple’s stock. Digging a bit deeper into the company’s actual operating performance can provide some insight into what a good job Cook has done.
What should a corporate manager focus on? The stock price? How about the most efficient and most profitable way to provide goods and services? There are different ways to do this, and Apple has focused on quality, reliability and excellent service to build customer loyalty.
Apple’s commitment can be experienced by anyone who calls the company for customer service. It is easy to get through to a well-trained representative who will solve your problem. How many companies can say that at a time when it seems many companies cannot even handle answering the phone?
Getting back to actual performance, Cook took over as Apple’s CEO in August 2011 when Steve Jobs stepped down. The chart below shows the company’s quarterly returns on invested capital from the end of 2010 through September 2022.
Apple’s returns on invested capital have increased markedly over the past six years.
FactSet
A company’s return on invested capital (ROIC) is its profit divided by the sum of the carrying value of its common stock, preferred stock, long-term debt and capitalized lease obligations. ROIC indicates how well a company has made use of the money it has raised to run its business. It is an annualized figure, but available quarterly, as used in the chart above.
The carrying value of a company’s stock may be a lot lower than its current market capitalization. The company may have issued most of its shares long ago at a much lower share price than the current one. If a company has issued shares recently or at relatively high prices, its ROIC will be lower.
A company with a high ROIC is likely either to have a relatively low level of long-term debt or to have made efficient use of the borrowed money.
Among companies in the S&P 500 that have been around for at least 10 years, Apple placed within the top 20 for average ROIC for the previous 40 reported fiscal quarters as of Sept. 1.
As you can see on the chart, Apple’s ROIC has improved dramatically over the past five years, even as the wide adoption of the company’s products and services has led to an overall slowdown in sales growth.
A quick comparison with other giants in the benchmark index
It might be interesting to see how Apple stacks up among other large companies, in part because some businesses are more capital-intensive than others. For example, over the past four quarters, Apple’s ROIC has averaged 52.9%, while the average for the S&P 500 has been a weighted 12.1%, by FactSet’s estimate.
Here are the 10 companies in the S&P 500 reporting the highest annual sales for their most recent full fiscal years, with a comparison of average ROIC over the past 40 reported quarters:
Company Ticker Annual sales ($mil) Avg. ROIC – 40 quarters Total Return – 10 Years Walmart Inc. WMT,
-0.02% $572,754 11.0% 142% Amazon.com Inc. AMZN,
-3.06% $469,822 6.8% 693% Apple Inc. AAPL,
-4.24% $394,328 33.0% 721% CVS Health Corp. CVS,
+1.03% $291,935 6.8% 161% UnitedHealth Group Inc. UNH,
+0.03% $287,597 13.7% 1,031% Exxon Mobil Corp. XOM,
+1.36% $280,510 9.9% 85% Berkshire Hathaway Inc. Class B BRK.B,
-1.94% $276,094 8.2% 233% McKesson Corp. MKC,
-0.61% $263,966 6.6% 353% Alphabet Inc. Class A GOOGL,
-4.07% $257,488 16.6% 405% Costco Wholesale Corp. COST,
+0.57% $226,954 16.2% 558% Source: FactSet Among the largest 10 companies in the S&P 500 by annual sales, Apple takes the top ranking for average ROIC over the past 10 years, while ranking second for total return behind UnitedHealth Group Inc.
UNH,
+0.03%
and ahead of Amazon.com Inc.
AMZN,
-3.06% .
UnitedHealth has been able to remain at the forefront of managed care during the period of transition for healthcare in the U.S., in the wake of President Barack Obama’s signing of the Affordable Care Act into law in 2010.Here’s a chart showing 10-year total returns for Apple, UnitedHealth Group, Amazon and the S&P 500:
FactSet
Apple is only slightly ahead of Amazon’s 10-year total return. But what is so striking about this chart is the volatility. Apple has had a smoother ride. During the bear market of 2022, Apple’s stock has declined 18%, while the S&P 500 has gone down 20%, the Nasdaq has fallen 32% (all with dividends reinvested) and Amazon has dropped 45%.
The broad indexes would have fared even worse so far this year without Apple.
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Elon Musk completes Twitter purchase, fires CEO and other top execs: reports
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Twitter Inc. is now owned by Elon Musk, with multiple media outlets reporting Thursday night that the long-anticipated sale had officially closed.
The Wall Street Journal, Washington Post and others reported, based on unnamed sources, that the top executives of Twitter
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+0.66%
were fired and escorted from the building, including Chief Executive Parag Agrawal, Chief Financial Officer Ned Segal and Vijaya Gadde, head of legal policy, trust and safety.Musk himself is expected to assume the role of interim CEO, though in the longer term may appoint someone else, Bloomberg reported early Friday, citing unnamed sources. Twitter did not respond to a request by the publication for comment.
Also read: Elon Musk on the hook to pay more than $200 million to 3 fired Twitter execs
The acquisition ends months of legal wrangling after Musk, the billionaire CEO of Tesla Inc.
TSLA,
+0.20%
and SpaceX and a frequent Twitter user, offered to buy Twitter in April. After reaching an agreement with Twitter’s board to buy the social media company for $44 billion, Musk tried to back out of the deal and Twitter sued him. He faced a Friday deadline to complete the deal or face trial.In a tweet late Thursday night, Musk said only: “the bird is freed.”
Opinion: Twitter stood up to Elon Musk and won, but will it feel like a win once he owns it?
Thursday morning, Musk signaled a deal was imminent when he tweeted a statement aimed at assuring advertisers, some of whom might be concerned about his plans for content moderation. Musk has said one of his motivations for buying the platform is related to complaints about censorship, mostly from people who have been banned because they have violated Twitter’s terms of service.
“Twitter obviously cannot become a free-for-all hellscape, where anything can be said with no consequences!” Musk said in his statement to advertisers Thursday.
Twitter did not immediately return a request for comment late Thursday.
The Bloomberg report added that Musk also plans to end lifetime bans for users, meaning former President Donald Trump could return to Twitter, though it’s unclear how soon that could happen, the source said.
Twitter shares have rallied 26% over the past month, closing Thursday at $53.70, close to the $54.20 share price Musk agreed to pay in April.
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Ford reins in hopes for self-driving cars as Argo AI shuts down
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After betting big on self-driving cars — including $1 billion on soon-to-be shuttered startup Argo AI — Ford Motor Co. is softening its expectations on vehicles that don’t require drivers.
Ford
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-0.08%
executives on Wednesday said they were winding down their investment in Argo, which confirmed an earlier report of its plans to shut down, saying there were too many challenges to running a profitable network of fully self-driving vehicles anytime soon. That resulted in a $2.7 billion impairment on the startup, disclosed when Ford reported third-quarter results earlier in the day.“We still believe in Level 4 autonomy, that it will have a big impact on our business of moving people,” Ford CEO Jim Farley said on the company’s earnings call, referring to cars that are autonomous enough not to need handling from a driver. “We’ve learned, though, in our partnership with Argo, and after our own internal investments, that we will have a very long road.”
“It’s estimated that more than $100 billion has been invested in the promise of Level 4 autonomy,” he continued. “And yet no one has defined a profitable business model at scale.”
Executives described hurdles with building out technology and auto fleets, as well as the vast infrastructure of non-technological services, to turn a profit on self-driving cars. And they said the talents of the staff they have today would be better spent on less-sophisticated driver-assistance systems.
Argo AI told MarketWatch that some of its 2,000 employees would be able to continue working on the vehicle technology with Ford and Volkswagen AG. Volkswagen
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was Argo’s other big backer.“In the third quarter, Ford made a strategic decision to shift its capital spending from the L4 advanced driver-assistance systems being developed by Argo AI to internally developed L2+/L3 technology,” executives said in Ford’s earnings release. “Earlier, Argo AI had been unable to attract new investors.”
The remarks came as the auto industry deals with more immediate concerns about both production and demand, as ongoing supply-chain contortions lead to parts shortages and higher prices. Some signs have emerged that those supply-chain hitches have eased. But higher prices risk spooking potential car buyers.
During the call on Wednesday, executives said they’d seen a slight downtick in commodity prices. But Farley painted a mixed portrait of pricing and demand trends.
Demand for commercial vehicles and electric vehicles was “through the roof,” he said. But he noted a “slight uptick” from the prior quarter on 84-month customer financing, as customers stretch out car payments. And he said some of Ford’s rivals had boosted spending on incentives.
Meanwhile, Ford’s third-quarter results beat analysts’ estimates, though the auto maker forecast full-year adjusted profit at the low end of its expectations.
Ford reported a net loss of $800 million for the third quarter, or 21 cents a share, contrasting with a $1.8 billion profit, or 45 cents a share, in the prior-year period. The auto maker’s sales were $39.4 billion, compared with $35.7 billion in the quarter last year.
Adjusted for gains and losses on pensions, investments and costs related to things like staff and dealerships, Ford earned 30 cents a share, compared with 51 cents a year ago.
Analysts polled by FactSet expected adjusted earnings of 27 cents a share, on sales of $37.46 billion.
Executives said they expected full-year earnings before interest and taxes to be about $11.5 billion. In September, the company said it expected that figure to land within a range of $11.5 billion to $12.5 billion.
Ford also raised its full-year outlook for adjusted free-cash flow to $9.5 billion to $10 billion. It ended the third quarter with operating cash flow of $3.8 billion, and adjusted free-cash flow of $3.6 billion.
Shares fell 1% after hours.
Ford in September warned that tighter supplies of auto parts would leave it with 40,000 to 45,000 unfinished vehicles sitting in its inventories at the end of the third quarter, with “inflation-related supplier costs” running about $1 billion higher than expected. But the company, at that time, stuck with its full-year adjusted-profit outlook.
Ford, as with other auto makers, is putting more effort behind developing electric cars and trucks, including an electric version of its popular F-150. But it is laying off thousands as part of a split into two businesses — one devoted to electric vehicles, called Ford Model e, and one devoted internal combustion engines, called Ford Blue.
A day earlier, rival General Motors Co. noted signs of its supply chains loosening up.
On Tuesday, executives at General Motors
GM,
+2.30%
noted easing in its supply chain and production improvements despite a difficult economic backdrop. GM stuck with its full-year outlook, cited strong demand, and said the company had landed some supply agreements and was working with chip makers to loosen up the flow of car parts and components.Shares of GM fell 0.2% on Wednesday.
The auto market has been roiled by a semiconductor shortage that gummed up production and drove up the price of new cars, and then used ones, as new vehicles got too expensive for buyers. Used car prices have trended lower since. UBS analysts have said that an auto undersupply could balloon into an oversupply, as higher prices threaten to suppress consumer shopping and raise concerns of a recession.
Edmunds last month said it expected new-vehicle sales in the U.S. to fall 0.9% in the third quarter when compared with the period in 2021. The auto-data provider said auto inventories have expanded, as chip supply chains open up.
Ford stock is down 38% so far this year. By comparison, the S&P 500 index
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-0.74%
is down 20% over that time.[ad_2]
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IBM stock rallies on third-quarter results, upbeat forecast
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Shares of International Business Machines Corp. rallied in extended trading Wednesday, after the tech software, consulting and infrastructure giant reported third-quarter results that beat expectations and offered up a more upbeat full-year sales forecast.
IBM
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reported earnings as Wall Street tries to gauge the impact of a tough foreign-exchange environment, and the state of business spending on tech services amid worries over a downturn. But the company saw gains in hybrid cloud services, products like open-source software platform Red Hat, its consulting services and its zSystems servers and software.“Globally, clients view technology as an opportunity to enhance their business, which is evident in the results across our portfolio,” Chief Executive Arvind Krishna said in a statement. He added that he now expects full-year sales growth “above our mid-single-digit model.”
That’s a bit more optimistic than the forecast he gave over the summer, when IBM reported second-quarter results. Krishna, at that time, said he continued “to expect full-year revenue growth at the high end of our mid-single-digit model.”
Wall Street expects IBM’s full-year sales to come in at $59.667 billion, according to FactSet. Analysts expect 2022 earnings per share of $9.28. IBM also said it continued to expect around $10 billion in consolidated free cash flow for the year.
For the third quarter, the company reported a net loss of $3.2 billion, or $3.54 per share, compared with a $1.1 billion profit, or $1.25 per share, in the year-earlier period. On an adjusted basis, IBM earned $1.81 per share.
Sales came in at $14.1 billion, compared with $13.3 billion a year ago.
Analysts polled by FactSet expected adjusted earnings per share of $1.79, on revenue of $13.517 billion.
Revenue in the company’s software segment grew 7.5%. Consulting revenue rose 5.4%, while the company’s infrastructure segment jumped 14.8%.
Shares gained 4.8% after hours on Wednesday.
Prior to the results, analysts had zeroed in on the impact of the strong dollar and what Morgan Stanley, in a recent note, described as “continued wage pressure in consulting.” IBM has also been trying to lean more into cloud and AI technology, unloading some businesses in an effort to narrow its focus.
Last year, in a move toward that goal, IBM spun off its infrastructure services business into Kyndryl Holdings
KD,
-2.85% .
But afterward, some analysts raised questions about IBM’s ability to grow sales and compete in the cloud-services industry. Francisco Partners, an investment firm, this year also acquired health-care data and analytics assets that were part of IBM’s Watson Health segment.In January, IBM declined to provide an earnings-per-share forecast. The company also changed how it organizes its business segments at the beginning of this year.
But during the spring, Krishna said he saw “demand staying strong” even if economic growth flattens or enters into a brief recession, with the decision to halt business in Russia, following its invasion of Ukraine, the only drag on results.
IBM stock is down 8% year to date. By comparison, the S&P 500 Index
SPX,
-0.67%
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Elon Musk teases massive Tesla stock buyback as CFO trims forecast for annual deliveries and stock falls
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Tesla Inc. Chief Executive Elon Musk suggested the electric-vehicle maker could repurchase up to $10 billion worth of its stock Wednesday, as shares declined following a third-quarter revenue miss and his CFO brought down delivery expectations for the full year.
Some Tesla
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+0.84%
investors have been agitating for a stock buyback after multiple stock splits and the company losing more than a third of its market capitalization in 2022, and Musk said in an earnings conference call that Tesla’s board has discussed a buyback in the range of $5 billion to $10 billion.“We debated the buyback idea extensively at board level. The board generally thinks that it makes sense to do a buyback, we want to work through the right process to do a buyback, but it is something possible for us to do a buyback on the order of $5 [billion] to $10 billion even in a downside scenario next year, given next year is very difficult,” he said, adding that it “is obviously pending board review and approval.”
“So it’s likely that we will do some meaningful buyback,” he concluded.
The statement did not immediately move Tesla’s stock, as it was followed closely by a forecast revision from Chief Financial Officer Zachary Kirkhorn, who said, “We do expect to be just under 50% growth [for deliveries] due to an increase in the cars in transit at the end of the year.”
Tesla delivered a record number of cars in the third quarter, but still missed analysts’ expectations and made it more difficult to hit executives’ target for the year of an increase of more than 50% in vehicle deliveries. Kirkhorn said that the company will increase production of cars by 50%, “although we are tracking supply-chain risks which are beyond our control.”
Shares declined more than 6% following the car company’s earnings report. Tesla reported third-quarter earnings of $3.29 billion, or 95 cents a share, on sales of $21.45 billion, up from $13.76 billion a year ago. After adjusting for stock-based compensation, the electric-vehicle manufacturer reported earnings of $1.05 a share, up from 62 cents a share a year ago.
Analysts on average were expecting adjusted earnings of $1 a share on sales of $21.98 billion, according to FactSet. Tesla shares declined about 5% in after-hours trading immediately following the release of the results, after closing with a 0.8% increase to $222.04 in the regular trading session.
Tesla shares have fallen more than 37% so far this year, a harder descent than the 22% decline of the S&P 500 index
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after years of outsize gains. Pundits have put forth a variety of reasons for the downturn, including increasing competition in the EV market, negative press around Tesla’s full-self-driving claims and actual performance, and Musk’s attention being diverted to his attempt to acquire Twitter Inc.
TWTR,
+0.10% .Don’t miss: Market share for electric vehicles expected to roughly double
None of that cowed Musk, however. He predicted that Tesla would be worth as much as the two most valuable companies in the world, Apple Inc.
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and Saudi Arabian Oil Co.
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combined. Both companies have market capitalizations topping $2 trillion.“Now I am of the opinion that we can far exceed Apple’s current market,” Musk said on the call, after referencing a previous prediction that Tesla would reach Apple’s then-record market cap. “In fact, I see a potential path for Tesla to be worth more than Apple and Saudi Aramco combined. That doesn’t mean it will happen or that it will be easy, in fact it will be very difficult, require a lot of work, very creative new products, expansion and always good luck. But for the first time I’m seeing, I see a way for Tesla to be, let’s say roughly twice the value of Saudi Aramco.”
In a preview of the report Tuesday, Wedbush Securities analyst Daniel Ives said that “the Street is starting to worry that the bloom is coming off the rose in the Tesla story with delivery shortfalls front and center.”
“Between logistical issues in China, supply-chain problems, FSD black-eye moments, the Musk Twitter fiasco and EV competition increasing across the board, there is growing pressure on Musk & Co. to prove themselves,” Ives wrote.
Tesla’s automotive gross margin, which declined in the second quarter despite price increases that Musk called “embarrassing,” were the same sequentially at 27.9%. Operating margin increased both sequentially and year-over-year, however, to 17.2% from 14.6% both in the third quarter a year ago and the previous quarter.
Earnings preview: Do record Tesla deliveries mask a demand problem?
In their communications with investors on Wednesday, Tesla executives disclosed that they will change the process for one of their most challenging tasks of late — transporting cars — in hopes of bringing costs down.
“We are reaching such significant delivery volumes in the final weeks of each quarter that transportation capacity is becoming expensive and difficult to secure. As a result, we began transitioning to a smoother delivery pace, leading to more vehicles in transit at the end of the quarter,” the company’s shareholder deck reads. “We expect that smoothing our outbound logistics throughout the quarter will improve cost per vehicle.”
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WSJ News Exclusive | Peloton Co-Founder John Foley Faced Repeated Margin Calls From Goldman Sachs as Stock Slumped
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John Foley, the co-founder and former chief executive of Peloton Interactive faced repeated margin calls on money he borrowed against his Peloton holdings before he left the fitness company’s board last month, according to people familiar with the situation.
As Peloton’s shares slumped over the past year, Goldman Sachs Group asked Mr. Foley several times to provide fresh funds or additional collateral for personal loans the bank had extended to him, the people said. The company’s share price has fallen nearly 95% from its $160 peak in December 2020.
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