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Disney has a revenue disaster



Walt Disney (DIS.N) reported missing Wall Street’s revenue expectations for the quarter, yet assured investors that it was set to surpass its earlier commitment to slash costs by over $5.5 billion as pledged in February.

Despite the announcement, the entertainment conglomerate noted a slight underperformance in U.S. Disney+ subscribers compared to analyst forecasts.

Following the release of the results, Disney shares experienced a 1% decline in after-hours trading.

CEO Bob Iger, in his second tenure leading Disney, confronts a range of challenges spanning the entirety of the entertainment empire. Apart from Wall Street’s mandate to attain profitability in its streaming division, Disney contends with a deteriorating television segment and a film box office that has yet to rebound to pre-COVID levels.

Unprecedented times

Iger addressed this transformation in a statement, characterizing it as “unprecedented” and inclusive of company restructuring aimed at enhancing efficiency and rekindling creativity. “In the eight months since my return, these important changes are creating a more cost-effective, coordinated and streamlined approach to our operations, that has put us on track to exceed our initial goal of $5.5 billion in savings,” he stated.

Disney’s fiscal third quarter saw a reduction in losses within its streaming video services to $512 million, compared to a loss of approximately $1.1 billion from a year ago. The addition of 800,000 Disney+ subscribers fell short by 100,000 in comparison to analyst projections. Furthermore, the company saw a decrease of 12.5 million subscribers for the Disney Hotstar service in India, representing nearly 25% of its subscribers. This was attributed to the relinquishment of rights to Indian Premiere League cricket matches.

Revenue for the quarter ending July 1 was reported at $22.33 billion, indicating a 4% increase from the previous year. However, this figure fell below the Wall Street consensus estimate of $22.5 billion, as per Refinitiv data. Adjusted earnings per share amounted to $1.03, surpassing Wall Street’s forecast of 95 cents per share. The comparability of these adjusted profit figures was not immediately clear.

Restructuring costs

The quarter included $2.65 billion in impairment and restructuring charges, covering expenses related to content removal from streaming services, termination of licensing agreements, and $210 million in severance payments for laid-off employees.

Disney’s conventional television business sustained a decline in revenue and operating income across both its broadcast and cable TV sectors. Elevated production costs for sports programming and decreased affiliate revenue impacted the performance of its cable channels. Television revenue for the quarter experienced a 7% decrease, amounting to $6.7 billion, while operating income dropped by 23%, reaching $1.9 billion.

Disney’s direct-to-consumer segment recorded a 9% rise in revenue, totaling $5.5 billion, with higher average revenue per subscriber for Disney+ and Hulu.

The unit responsible for content sales and licensing reported a more substantial operating loss of $243 million, compared to a $27 million loss in the preceding year. This quarter encompassed the release of “Guardians of the Galaxy Vol. 3,” which underperformed at the box office compared to the prior year’s “Doctor Strange in the Multiverse of Madness.” The live-action remake of “The Little Mermaid,” released during the same quarter, also fell short of expectations.

The Parks, Experiences, and Products group observed a 13% revenue increase, reaching $8.3 billion, alongside an 11% boost in operating income, totaling $2.4 billion. The upturn was driven by the recovery of Shanghai Disney Resort, which operated throughout the quarter compared to the same period a year ago when it was closed for all but three days due to COVID-19 restrictions. The domestic parks experienced a decline in operating income, largely attributed to decreased performance at the Walt Disney World Resort in Orlando, Florida.

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US energy stocks surge amid economic growth and inflation fears



Investors are turning to U.S. energy shares in droves, capitalizing on surging oil prices and a resilient economy while seeking protection against looming inflationary pressures.

The S&P 500 energy sector has witnessed a remarkable ascent in 2024, boasting gains of approximately 17%, effectively doubling the broader index’s year-to-date performance.

This surge has intensified in recent weeks, propelling the energy sector to the forefront of the S&P 500’s top-performing sectors.

A significant catalyst driving this rally is the relentless rise in oil prices. U.S. crude has surged by 20% year-to-date, propelled by robust economic indicators in the United States and escalating tensions in the Middle East.

Investors are also turning to energy shares as a hedge against inflation, which has proven more persistent than anticipated, threatening to derail the broader market rally.

Ayako Yoshioka, senior portfolio manager at Wealth Enhancement Group, notes that having exposure to commodities can serve as a hedge against inflationary pressures, prompting many portfolios to overweight energy stocks.

Shell Service Station

Shell Service Station

Energy companies

This sentiment is underscored by the disciplined capital spending observed among energy companies, particularly oil majors such as Exxon Mobil and Chevron.

Among the standout performers within the energy sector this year are Marathon Petroleum, which has surged by 40%, and Valero Energy, up by an impressive 33%.

As the first-quarter earnings season kicks into high gear, with reports from major companies such as Netflix, Bank of America, and Procter & Gamble, investors will closely scrutinize economic indicators such as monthly U.S. retail sales to gauge consumer behavior amidst lingering inflation concerns.

The rally in energy stocks signals a broadening of the U.S. equities rally beyond growth and technology companies that dominated last year.

However, escalating inflation expectations and concerns about a hawkish Federal Reserve could dampen investors’ appetite for non-commodities-related sectors.

Peter Tuz, president of Chase Investment Counsel Corp., highlights investors’ focus on the robust economy amidst supply bottlenecks in commodities, especially oil.

This sentiment is echoed by strategists at Morgan Stanley and RBC Capital Markets, who maintain bullish calls on energy shares, citing heightened geopolitical risks and strong economic fundamentals.

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How Australians lose nearly $1 billion to card scammers in a year



A recent study by Finder has unveiled a distressing trend: Australians are hemorrhaging money to card scams at an alarming rate.

The survey, conducted among 1,039 participants, painted a grim picture, with 2.2 million individuals – roughly 11% of the population – falling prey to credit or debit card skimming in 2023 alone.

The financial toll of these scams is staggering. On average, victims lost $418 each, amounting to a colossal $930 million collectively across the country.

Rebecca Pike, a financial expert at Finder, underscored the correlation between the surge in digital transactions and the proliferation of sophisticated scams.

“Scammers are adapting, leveraging sophisticated tactics that often mimic trusted brands or exploit personal connections. With digital transactions on the rise, it’s imperative for consumers to remain vigilant and proactive in safeguarding their financial assets,” Pike said.

Read more – How Google is cracking down on scams

Concerning trend

Disturbingly, Finder’s research also revealed a concerning trend in underreporting.

Only 9% of scam victims reported the incident, while 1% remained oblivious to the fraudulent activity initially. Additionally, 1% of respondents discovered they were victims of bank card fraud only after the fact, highlighting the insidious nature of these schemes.

Pike urged consumers to exercise heightened scrutiny over their financial statements, recommending frequent monitoring for any unauthorised transactions.

She explained the importance of leveraging notification services offered by financial institutions to promptly identify and report suspicious activity.

“Early detection is key. If you notice any unfamiliar transactions, don’t hesitate to contact your bank immediately. Swift action can mitigate further unauthorised use of your card,” Pike advised, underscoring the critical role of proactive measures in combating card scams.

As Australians grapple with the escalating threat of card fraud, Pike’s counsel serves as a timely reminder of the necessity for heightened vigilance in an increasingly digitised financial landscape.

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Workers rush back to their desks over job fears



Workers across Australia are rushing back to their desks, driving office utilisation rates to their highest levels since February 2020.

Tuesdays, Wednesdays, and Thursdays emerge as the busiest in-office days, contrasting with the continued reluctance to return on Fridays.

This insight, drawn from XY Sense data based on 18 enterprise customers in Australia employing approximately 68,000 individuals across 127 buildings, reflects a significant shift in workplace dynamics.

The surge in office attendance coincides with a resurgence in workplace attendance mandates and policies linking physical presence to bonuses and performance reviews.

However, co-founder of XY Sense, Alex Birch, suggests that rising job insecurity, rather than these policies, primarily drives this behavioral shift.

“The pendulum has moved towards the employer, and therefore people feel more obliged to go back into work,” commented Mr. Birch.

Job market

Danielle Wood, chairwoman of the Productivity Commission, anticipates this trend to persist as the job market softens.

She notes a disparity between employer and worker perceptions regarding the productivity benefits of hybrid work arrangements, hinting at potential shifts in the employment landscape.

Meanwhile, economists at the e61 Institute observe a partial reversal of the pandemic-induced “escape to the country” trend.

Rent differentials between regional and capital city dwellings, which narrowed during the pandemic, are now widening again.

This trend suggests a diminishing appeal of remote work options and a return to urban commuting.

Aaron Wong, senior research economist at e61, said the emergence of a “new normal,” characterised by a hybrid lifestyle that blends access to office spaces with proximity to lifestyle amenities such as natural landscapes.

While regional rents decline, rents for homes on the urban fringe surge, reflecting evolving preferences shaped by remote work opportunities.

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