Disney saw a sharp drop in profits in the first-quarter. Disney said the Covid-19 outbreak cost it $1.4 billion in operating income. The company is also suspending its dividend payment for the first half of its fiscal year. Rich Greenfield, partner at LightShed, joins "Squawk Box" to discuss.
Disney reported mixed results for its Q2 2020 earnings after the bell on Tuesday. The stock jumped around on the news of the report but was down more than 2% after hours following the earnings call. The coronavirus pandemic has disrupted Disney’s theme parks and cruise businesses but boosted engagement on its newly-launched streaming service, Disney+.
Here’s what Disney reported:
Earnings per share (EPS): 60 cents, ex-items
Revenue: $18.01 billion
Wall Street had been anticipating earnings per share of 89 cents on revenue of $17.80 billion, based on Refinitiv consensus estimates. However, it’s difficult to compare reported earnings to analyst estimates for Disney’s second quarter, as the pandemic continues to hit global economies and makes earnings impact difficult to assess.
This was Bob Chapek first earnings call as CEO of Disney, after former CEO Bob Iger announced in February he would transition to the role of executive chairman. Iger previously told investors would shift his focus to creative projects, but he was the first to speak on the company’s analyst call. Though he was largely absent from the Q&A section. Iger reportedly was called back into the day-to-day operations as stay at home orders accelerated across the U.S.
Disney is suspending its dividend payout for the first half of the fiscal year, CFO Christine McCarthy said on the call. The move would preserve $1.6 billion in cash assuming the dividend held constant at 88 cents per share, McCarthy said. Total operating income was $2.42 billion in the quarter, down from $3.82 billion, a 37% drop.
McCarthy said Disney would revisit and address the dividend again in the next six months once it is better able to assess the impact of the virus.
The pandemic’s impact was especially pronounced in its Parks, Experiences and Products segment. Disney estimated the impact on its operating income for that segment was about $1 billion mostly due to revenue lost because of closures. The company reported a 58% drop in operating income for the segment this quarter compared to the same period last year.
On the company’s analyst call, Chapek discussed the new procedures Disney would put in place at its parks once they reopen, including limiting guest capacity, implementing density control and health precautions like temperature checks and masks.
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