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☆ Disney will solve its Netflix problem
▼ + stars: | 2022-11-08 | by ( ) www.reuters.com time to read: +2 min

NEW YORK, Nov 8 (Reuters Breakingviews) - Walt Disney (DIS.N) boss Bob Chapek is knee-deep in the video-streaming money pit. New subscribers keep signing up, too: Disney+ counts 164 million, a 39% jump from 12 months earlier. With investors now prioritizing costs over growth, however, Disney shares fell 10% in after-hours trading. Netflix generated $5 billion of operating profit over the first nine months of 2022. If the Netflix enterprise commands 18 times expected EBITDA, per Refinitiv data, Disney will find enough fairy dust to warrant a multiple higher than 12 times.

☆ Tech firms can’t swing the axe equally
▼ + stars: | 2022-11-08 | by ( Jennifer Saba | ) www.reuters.com time to read: +4 min

But mass layoffs in other industries suggests that firms should be careful not to over-fire. Mark Zuckerberg’s $253 billion outfit is preparing to slash thousands of workers this week, according to the Wall Street Journal. Twitter’s new owner Elon Musk is blaming a massive drop in revenue as the reason to cull half of the social network’s 7,500 employees. These tech firms, though established, are also largely untested through a downturn. Twitter on Nov. 4 laid off half of its staff, or around 3,700 people, Reuters reported.

☆ IPhone plant woes are least of Apple’s problems
▼ + stars: | 2022-11-07 | by ( Robert Cyran | ) www.reuters.com time to read: +3 min

But problems there look pale in comparison to other issues caused by Apple’s own consumers. The company led by Tim Cook warned on Nov. 6 that disruption at the Zhengzhou complex has lowered shipments of high-end iPhone 14 Pro phones. Apple recently put on ice plans to increase production of the newly launched iPhone 14. But last quarter, sales of services rose just 5%, a huge step back from the 25% jump in sales in the same quarter in 2021. Follow @rob_cyran on TwitterCONTEXT NEWSApple warned on Nov. 6 that shipments of iPhone 14 Pro and iPhone 14 Pro Max have been disrupted by production woes at a Hon Hai Precision Industry complex in Zhengzhou, China.

☆ Starbucks waits stubbornly in China queue
▼ + stars: | 2022-11-04 | by ( ) www.reuters.com time to read: +2 min

NEW YORK, Nov 4 (Reuters Breakingviews) - Howard Schultz is patiently sipping on a salted caramel Americano while he stubbornly waits for the slow drip in Shanghai. The Starbucks (SBUX.O) boss on Thursday unveiled 3% revenue growth, to $8.4 billion, for the three months through Oct. 2 despite the top line falling 20% in China because of the country’s zero-Covid policy. North America generated nearly all of Starbucks’ operating income, helping bridge what Schultz calls the “nonlinear” recovery in China. Shareholders seem ready to bide their time, too, imputing a healthy multiple of 25 times expected earnings at Starbucks. With limited growth options elsewhere, Starbucks may have little choice but to double down there.

☆ For your consideration: Warner-Discovery part two
▼ + stars: | 2022-11-03 | by ( Jennifer Saba | ) www.reuters.com time to read: +3 min

The Warner Bros Discovery (WBD.O) boss has encountered a series of problems since his splashy merger in April. A giant pile of borrowed money used to help cover the cash outlay to AT&T (T.N) for Warner Media looms large. Warner Bros Discovery counts more than 90 million subscribers for services such as HBO Max, less than half as many as at Disney and Netflix. There might be another $3 billion in savings, using the same 20% of EBITDA targeted by Warner Media and Discovery. Its shares have fallen about 48%, to nearly $12 apiece, since the merger of Discovery with AT&T’s Warner Media on April 8.

☆ Elon Musk’s Twitter runs into subscription fatigue
▼ + stars: | 2022-11-02 | by ( ) www.reuters.com time to read: +1 min

NEW YORK, Nov 2 (Reuters Breakingviews) - Elon Musk is on a mission for some much-needed revenue at Twitter. The social-media company’s new owner tweeted, appropriately enough, that he would start charging users $8 a month for a blue check, the symbol that affirms a user’s authenticity. Strapped consumers are already rethinking the litany of fees they pay regularly to everyone from Walmart (WMT.N) to Spotify Technology (SPOT.N). As Musk noted, though, he has his own bills to pay after larding $13 billion of debt onto the company. Even if everyone with a blue check forks over $96 annually, it would only add up to around $41 million.

☆ Dollar stores getting penny-wise
▼ + stars: | 2022-11-02 | by ( ) www.reuters.com time to read: +2 min

NEW YORK, Nov 2 (Reuters Breakingviews) - Dollar stores are fighting to retain pricing power, but a new lawsuit suggests it might get tougher. Ohio Attorney General David Yost sued Dollar General (DG.N) on Tuesday for deceptive practices after some customers complained about coughing up $2 on occasion rather than a buck. For now, raising prices at $57 billion Dollar General seems to be working. Such stores certainly have in the past as consumers seek cheaper options. Unlike in previous economic slumps, where dollar stores could shrink the size of, say, a bag of chips and stick with the $1 price tag, charging more now could mean that products already have been fully condensed.

☆ Stephen King makes for unlikely antitrust hero
▼ + stars: | 2022-11-01 | by ( Jennifer Saba | ) www.reuters.com time to read: +4 min

A U.S. judge blocked Penguin Random House’s $2.2 billion acquisition of rival Simon & Schuster on Monday after the Department of Justice argued it would unfairly limit pay for top authors such as Stephen King. Adding Simon & Schuster would give it 70% of the literary nonfiction market, according to NPD Book Scan. The Department of Justice drew a line in its challenge to Penguin, distinguishing highly paid writers from the rest. Follow @jennifersaba on TwitterloadingCONTEXT NEWSA U.S. judge on Oct. 31 ruled that a planned $2.2 billion merger of Penguin Random House and rival Simon & Schuster cannot go forward. German media group Bertelsmann, the owner of Penguin, agreed to buy Simon & Schuster from Paramount Global in 2020.

☆ Blackstone strikes twice with Emerson carve-out
▼ + stars: | 2022-10-31 | by ( John Foley | ) www.reuters.com time to read: +4 min

The transaction employs an unusual structure similar to one Blackstone used successfully five years ago. It looks a lot like the deal Blackstone struck with Thomson Reuters(TRI.TO) – the parent company of Breakingviews – back in January 2018. Because debt accounted for around two-thirds of the purchase price, the quick sale roughly doubled the value of Blackstone and Thomson Reuters’ equity investments. Private equity group Blackstone will contribute $4.4 billion in cash, receiving a 55% equity stake in the business and a $2 billion convertible preferred note. Emerson, an industrial conglomerate that makes industrial instruments and software, will retain 45% of the division’s equity and a note worth $2.25 billion.

☆ Exxon and Apple are in a similar boat
▼ + stars: | 2022-10-28 | by ( Robert Cyran | ) www.reuters.com time to read: +3 min

NEW YORK, Oct 28 (Reuters Breakingviews) - Exxon Mobil (XOM.N) might be able to give Apple (AAPL.O) a lesson in disruption. Exxon’s profit was nearly triple last quarter what it was in the same quarter last year, and it wasn’t alone. Oil investors have been clear that they want discipline, as demand will likely peak soon if it hasn’t already. That means Exxon will presumably never reclaim its crown as the world’s most valuable firm, and Apple still earned far more than the company in the past year. Exxon earned $19.7 billion in the quarter, nearly tripling what it earned in the same period last year.

☆ Amazon gets irrationally swept up in tech angst
▼ + stars: | 2022-10-27 | by ( Lauren Silva Laughlin | ) www.reuters.com time to read: +4 min

Revenue for the business that delivers goods in the mail jumped to $107 billion, a 13% increase from a year earlier. Amazon said fourth-quarter operating income could be as low as zero along with net sales projections that fell below what analysts were expecting, according to estimates gathered by Refinitiv. Unlike Meta, Amazon is a victim of wider trends, including angst over the technology sector. Amazon Web Services, the data storage business, increased sales 28% from a year earlier to $20.5 billion, also short of Wall Street’s expectations. For the fourth quarter, Amazon said it expects net sales to be between $140 billion and $148 billion, up 2% to 8% from the fourth quarter in 2021.

☆ Zuckerberg motivates supervoting stock resistance
▼ + stars: | 2022-10-27 | by ( Jeffrey Goldfarb | ) www.reuters.com time to read: +3 min

NEW YORK, Oct 27 (Reuters Breakingviews) - Mark Zuckerberg is providing fresh motivation for investors everywhere. If there was ever a time for shareholders to rally against the sort of dual-class structures that surrender control to entrepreneurs, Zuckerberg has provided the ammunition. At the time of the stock sale, Zuckerberg commanded 57% of the vote with just a 28% economic stake, subjugating other owners with supervoting shares that carry 10 votes apiece. Meta reckons its board is sufficiently independent to keep watch over Zuckerberg, despite his codified influence over it. Rejecting supervoting stock would be the best option.

☆ GE is hurting but Larry Culp’s legacy has hope yet
▼ + stars: | 2022-10-25 | by ( Lauren Silva Laughlin | ) www.reuters.com time to read: +3 min

NEW YORK, Oct 25 (Reuters Breakingviews) - For Larry Culp, it’s not the journey but the destination. If all goes perfectly, it could be enough to salvage Culp’s legacy. Orders plummeted 43% year-on-year and revenue declined 15% as demand in the power division, which focuses on more traditional sources, rose. In healthcare, both orders and revenue were up just slightly in the first nine months of the year. If it succeeded in juicing up Vernova’s revenue, it could be game-changing for Culp’s legacy too.

☆ P&G’s pricing power hangs by a floss
▼ + stars: | 2022-10-19 | by ( Amanda Gomez | ) www.reuters.com time to read: +3 min

Third-quarter earnings show a company whose pricing power is hanging on by a piece of floss. That suggests people are about to ditch some of their few remaining small joys, even when it comes to necessary goods. The $300 billion consumer goods company led by Jon Moeller said on Wednesday that net sales increased 1% to $20.6 billion, and much of that increase came from jacking up prices. It suggests that the Cincinnati-based company is maintaining some pricing power. Follow @alpgomez on TwitterCONTEXT NEWSProcter & Gamble on Oct. 19 reported net sales of $20.6 billion for the quarter ended Sept. 30.

☆ Hasbro defines discretionary
▼ + stars: | 2022-10-18 | by ( ) www.reuters.com time to read: +2 min

NEW YORK, Oct 18 (Reuters Breakingviews) - Hasbro (HAS.O) toys are absolutely, positively not essential. Chief Executive Chris Cocks partly attributed the decline to over-ordering in the second quarter. Take the gains in that quarter and move them to the third quarter, and sales would’ve still fallen 14% year-over-year. Meantime prices are rising dramatically, and though Hasbro tried to pass on some of those costs, people in the market for Magic: The Gathering and Play-Doh pulled back spending. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Netflix has a wee bit of room to be smug
▼ + stars: | 2022-10-18 | by ( ) www.reuters.com time to read: +2 min

NEW YORK, Oct 18 (Reuters Breakingviews) - Netflix (NFLX.O) is fluffing it's feathers. The company co-founded by Reed Hastings snapped out of its subscriber losing streak, generating nearly $500 million in free cash flow after netting 2.4 million new subscribers in the third quarter. The reversal is a welcome change, and gives it a little bit of room to strut its stuff ahead of an impending price war. That gives it but a tiny bit of time to be smug. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Anti-woke ETF adopts progressive cause
▼ + stars: | 2022-10-11 | by ( ) www.reuters.com time to read: +2 min

Keeping tabs on such corporate actions is a tall order, especially when the ETF plans to mimic the make-up of the S&P 500 Index and avoid skewing investment toward anti-woke darlings such as the oil sector. Subjects like job creation and fair pay are topics that advocates such as the Congressional Progressive Caucus are advancing. So too is BlackRock (BLK.N) boss Larry Fink, who noted how companies manage their employees is material to investors’ interests. Typically those issues fall under the "S" in the environmental, social, and governance mandates that YALL is fighting against. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Gig worker rule comes at bad time for gig economy
▼ + stars: | 2022-10-11 | by ( Jennifer Saba | ) www.reuters.com time to read: +4 min

President Joe Biden’s administration is seeking to turn some independent contractors into employees. Shares of Uber, Lyft and DoorDash were down approximately 7% by noon in New York. Analysts expect Uber, DoorDash and Lyft to earn EBITDA margins of just 5% to 7% of revenue this year, according to Refinitiv. A gig worker rule comes at the worst possible time for America’s gig economy. The rule would require companies that rely on so-called gig workers to designate them as employees, making them eligible for more benefits and legal protections.

☆ Trustbusters’ metaverse gambit
▼ + stars: | 2022-10-10 | by ( ) www.reuters.com time to read: +2 min

NEW YORK, Oct 10 (Reuters Breakingviews) - Mark Zuckerberg isn’t the only one making risky gambits in the metaverse. On Friday, trustbusters at the Federal Trade Commission pared back their arguments against Meta Platforms’ (META.O) acquisition of virtual reality app maker Within. The agency run by Lina Khan stepped back from initial arguments that Meta’s Beat Saber game competes directly against Within’s Supernatural fitness app. That was always an odd stretching of definitions that both limited the market to a thin slice of virtual reality and at the same time included wildly disparate apps. That resembles arguments against the 2015 merger of sterilization companies Steris and Synergy – a case the FTC lost.

☆ How Cowen’s golden parachutes landed with a thud
▼ + stars: | 2022-10-07 | by ( John Foley | ) www.reuters.com time to read: +7 min

It's not unusual for executives to have so-called golden parachutes that trigger when their company is sold. Compared with the $400 million TD might have had to pay, that sounds like a bargain. But as a proportion of the overall deal value, Cowen’s executives punch above their weight. So even if Cowen’s top brass have agreed not to open their golden parachutes, they’ll still land at TD with considerable impact. The deal included a renegotiation of the severance packages held by Cowen’s top six executives, including Chief Executive Jeffrey Solomon.

☆ Biogen’s $11 bln Alzheimer’s gain has cushion
▼ + stars: | 2022-09-28 | by ( Robert Cyran | ) www.reuters.com time to read: +3 min

NEW YORK, Sept 28 (Reuters Breakingviews) - An effective treatment for Alzheimer’s disease has long been the holy grail for drug companies. The $11 billion pop in Biogen’s (BIIB.O) market capitalization on Wednesday morning looks impressive but implies some skepticism that Japan’s Eisai (4523.T), and its partner Biogen, have found it. If the drug is priced at $20,000 a patient annually after discounts, it implies around 330,000 take it. Considering the disease affects far more people globally and there are no effective treatments, this seems like a low bar. Eisai will present the study’s results in late November and said it will publish the results in a peer-reviewed journal.

☆ Gold will keep losing its irrational luster
▼ + stars: | 2022-09-27 | by ( Robert Cyran | ) www.reuters.com time to read: +3 min

NEW YORK, Sept 27 (Reuters Breakingviews) - Imagine telling gold bugs a decade ago that a pandemic, war in Europe and 8% U.S. inflation were coming. Believers say gold has been a store of value for millennia and offers a hedge against inflation and societal problems. While gold bulls worry about central banks debasing currencies by printing more, miners also keep extracting gold. About 205,000 tonnes worth some $11 trillion is held above ground and annual production has increased 26% since 2010, according to the World Gold Council. It was $1,763 a decade ago, according to the World Gold Council.

☆ Mega-bank status weighs on U.S. banking’s B-team
▼ + stars: | 2022-09-26 | by ( John Foley | ) www.reuters.com time to read: +4 min

The bosses of PNC Financial Services (PNC.N) , Truist Financial (TFC.N) and U.S. Bancorp (USB.N) joined jumbo-size counterparts on Capitol Hill for a grilling last week, their first appearance as what Congress terms mega-banks. Weighed on systemic significance, U.S Bancorp is around one-eighth as risky as JPMorgan, according to a U.S. Treasury analysis. They are also much simpler than their bigger rivals, lacking international networks and complex trading businesses. PNC boss Bill Demchak noted that his office is on Fifth Avenue, but the one in Pittsburgh, not Manhattan. Watchdogs say they fear a scenario where, say, U.S. Bancorp fails and needs to be absorbed by JPMorgan, making the biggest banks even bigger.

☆ Clock ticks for reining in TikTok risk
▼ + stars: | 2022-09-26 | by ( ) www.reuters.com time to read: +2 min

TikTok app logo is seen in this illustration taken, August 22, 2022. The more time that passes, the harder TikTok gets to police. Biden’s predecessor Donald Trump tried to force a sale two years ago and threatened to ban TikTok over concerns that Chinese parent ByteDance could take American data. Biden’s team has similar security worries, and the latest proposal is to have TikTok store its American data in the United States, according to the New York Times citing sources familiar with the talks. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ ESPN would help Disney and Comcast settle a score
▼ + stars: | 2022-09-23 | by ( Jennifer Saba | ) www.reuters.com time to read: +7 min

NEW YORK, Sept 23 (Reuters Breakingviews) - When it comes to modern corporate sagas, few deliver the drama between Walt Disney (DIS.N) and Comcast (CMCSA.O). Comcast Chief Executive Brian Roberts is in position to let his counterpart squirm, but there’s a neat solution to help settle the score: ESPN. He feared Comcast “would have paid more later.”Register now for FREE unlimited access to Reuters.com RegisterBefore long, Comcast clashed again with Disney. To settle the matter, the two parent companies agreed that in January 2024 Comcast could force Disney to buy its stake or Disney could require Comcast to sell based on a minimum valuation of $27.5 billion. Disney owns two-thirds of Hulu and Comcast owns the rest.

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