Closing Bell - Closing Bell Overtime: Disney Earnings Breakdown 2/8/23

Episode Date: February 8, 2023

A parade of earnings hit the tape in Overtime – with investors squarely focused on Disney. Instant shareholder analysis from Sand Hill Global’s Brenda Vingiello and Patti Brennan of Key Financial. Plus, Disney CEO Bob Iger announced a big restructuring on the company’s conference call. Jim Lebenthal of Cerity Partners gives his first reaction to that news. 

All right, Sarah, thank you very much. Welcome to Overtime. I'm Scott Wapner. You just heard the bells. We are just getting started from post nine here at the New York Stock Exchange. And we are moments away from the moment of truth for Disney. Its earnings about to hit with so many questions swirling around the future of that company. From Bob Iger's strategy moving forward to how he'll deal with that proxy fight from investor Nelson Peltz. Our Julia Borsten, she's going to break in with the details. We'll see what happens with the stock, which is up a good amount to start the year. We begin, though, with our talk of the tape, where stocks can really go from here, with even some of the more cautious market watchers suggesting there could be more room to run. Let's ask Cameron Dawson what she thinks. She's the chief investment officer for New Edge Wealth with me here at Post 9. Bear in mind, we're waiting on Disney, and I know the anticipation for you is high as well as we await this. And we see what Bob Iger is going to say, of course, in his first quarter and conference call since returning. But the rally itself, does it feel tired? Do you think that we have more upside to go? We think the next level that the rally could go to

would be about that $4,300. That gets you back to the August high. But then once we would get to $4,300, we would be trading at 19.5 times earnings. That's really, really expensive unless you have a Fed that's actively easing policy. So the technicals have certainly improved. They look better than at any time in 2022. And so we have to respect that. But from a fundamental perspective, we really see a challenge of getting anywhere north of that. Are you getting a little more positive, though, because the market has done better? I mean, let's be honest, right? You guys were underestimating, if you want to say it that way, this move in high beta. Oh, big time.

And the most shorted stocks, the unprofitable techs, the ones that have really led this rebound. Exactly. That's where we have been the most surprised and it has caught us flat footed, where we didn't expect in this degree of rebound in those high beta liquidity sensitive names simply because we have not seen an improvement in the liquidity environment. And so, yes, short covering can get you a rebound, but we have been surprised by the magnitude. But when we look and we ask the question, should we be chasing here? Should we be adding beta, adding risk to portfolios? We're still saying no. We stick with our quality bias because when we think you look six months out, 12 months out, that's still the right place to be. All right. Earnings are coming fast and furious, including when our Contessa Brewer has that for us. She's out in Las Vegas. What do we know, Contessa?

Scott, a billion dollars in revenue, a beat bigger than anticipated loss per share. Two big points here to make. Wynn set new EBITDA records in Las Vegas and Boston for the quarter and the year by a wide margin. EBITDA is the primary earnings metric in gaming. And the company says it's seen a meaningful increase in demand and visitation in Macau for the Chinese New Year. Big turnaround from what we saw last year. CEO Craig Billings was there recently. He joins us for an exclusive interview tomorrow in Halftime Report. The call starts in just about 10 minutes. The stock right now, as you can see, up about a third

of a percent. Scott? All right. All right, Contessa, good stuff. Thank you very much. And we'll look forward to that interview, of course, tomorrow during the Halftime Report. Still awaiting Disney, could be a couple of minutes or so away from that. We'll get you the very latest when all of that crosses the tape. Julia Boorstin is standing by with that. And I know you want to see what the stock does to back to stocks in general. The bond market and the Fed have gotten a little closer together, haven't they? Oh, certainly. So is the stock market in that same reality or reality distortion? No, they're in that reality distortion. The Fed has been speaking. The bond market is starting to listen to the Fed, but the equity market still has its hands over its ears and

is not listening. And you can tell that by looking at valuations. You can explain the move in the rally in January simply because real interest rates fell so much. And that's why we saw a big boost to valuations. But now real interest rates are climbing again, the two years climbing again, and yet valuations remain near their highs. And we think that is now, again, the risk for markets. You know, the other thing, though, is yes, but it's almost, and I said this with Mike Santoli yesterday, to this point, it's kind of markets to Powell zero. I mean, on Fed Day, he didn't do anything to upset the market at all. His speech at the Economic Club in D.C., he didn't do it again. The market rallied in his face again.

Yeah. It reminds me of July of last year because the Fed came out and tried to talk tough and hawkish in July. And the market completely ignored them. The market kept going up. And it wasn't until Jackson Hole that it really got the market's attention. And we saw that really sharp sell off. And so if we see inflation data come out hot next week, I think that could be the thing that gets this equity market to wake up. If that doesn't, then the equity market could continue to run kind of in the face of what the Fed is saying.

You're talking about the CPI, which comes out, I think, on the 14th. So we'll have to pay attention to that. The other big event, Clarida, right, former Fed vice chair. He said the quiet part out loud, didn't he? He used the, I call it the Clarida cuts because he actually talked about the possibility of a rate cut coming this year. Were you surprised? Yes. And it was also surprising to hear that comment from Powell. I got to interrupt you and I apologize for doing that. But Julia Boorstin does have Disney, which is out. Julia. Disney beating on the top and bottom line. That better than expected performance driven by results of the parks division and smaller than anticipated losses in the direct to consumer streaming division.

Take a look at shares now up about three percent. Now, revenues of twenty three point five billion. That grew eight percent and beat expectations of revenue of twenty three point four billion. That grew 8% and beat expectations of revenue of $23.4 billion. Earnings coming in adjusted at $0.99 per share, beating estimates of $0.78 per share. Disney Plus subscribers nearly a million higher than anticipated at almost $162 million, with that core Disney Plus subscriber base as excluding Hotstar up 1%. Total direct-to-consumer subscribers also falling less than anticipated to about 235 million. Now, losses at the direct-to-consumer division of about $1 billion was less than anticipated and also down from losses of a billion and a half in the year earlier quarter. Now, the key thing driving the results, revenues increased 21 percent at percent of the parks, experiences and products division,

while operating income at the division increased 25 percent with particular strength in higher volumes, as well as increased guest spending at the domestic parks. CEO Bob Iger saying in his quote at the top of the press release here, quote, We are embarking on a significant transformation. We believe going on to say we believe the work we are doing to reshape our company around creativity while reducing expenses will lead to sustained growth and profitability for our streaming business. Better position us. And then, of course, Scott, I have to say he talked about improving profitability. I'm sure he's going to be asked about that restructuring and cost cutting on the earnings call, which starts at 430 Eastern. You know what, Julia, really quick,

because I've seen this other quote, and I want your opinion on it because you know this so well. We're working to reshape the company around creativity. To me, that sounds like a shot across the bow at Bob Chapek, that one of the things that Iger talked about when he came back was putting decision making back in the control of the creative, the lifeblood, the heartbeat of this company. That to me is not lost at all on that statement. Absolutely. And look, he had already taken steps to undo some of the restructuring that Bob Chapek did. Bob Chapek separating the creative decision making from the distribution decision making and having those be run separately. Iger already took steps to reintegrate those. And clearly here is talking about doing more to reintegrate those different

parts of the business and try to make sure that they're profitable in all of their decision making as they do that. Of course, there's a lot of concern about the high costs around the direct-to-consumer Disney Plus streaming business, which we saw the costs are not quite as bad as anticipated. But yes, this is very clear. Bob Iger has made it clear from day one that he really wants to prioritize the creative content and those decision makers when it comes to figuring out where to put the films, where to put the TV shows, etc. All right. We'll hear from you again. I know that. The call's at the bottom of the hour, and that's really where the action, folks, is going to be.

As you hear from Bob Iger himself on his first conference call since returning, what sort of strategic maneuvers does he talk about? And then the big event tomorrow, an exclusive interview, 9 a.m. Eastern time on Squawk on the Street. Bob Iger and David Faber go one- one. And you do not want to miss that. I can promise you that. Let's bring in Disney shareholders now. Brenda Vangelo of Sandhill Global Advisors, Patty Brennan of Key Financial. It's great to have you both with us. Brenda is a CNBC contributor. So your first reaction here, Brenda, the streets trying to figure out which way it wants to go.

And it may not know until the call in some 20 minutes or so. But what do you think so far? Fair enough. But I think if we look at the quarter, things were actually a little bit better than we thought they might be. One, we got confirmation that the last quarter, their fiscal Q4 was potentially the peak in loss for the streaming business, which is great news that things are. Moving in the right direction there as secondarily we got confirmation that they actually had more subscribers than anticipated even in an

environment where. They raised price- for the. The traditional product I would like to hear more about what the initial- impact was at from the ad supported- option being introduced. But I do think the conference call this time

around is going to be really important everybody wants to hear from Bob Iger, hear about what his vision is for profitability of the company and certainly about reinvigorating their creative vision. But we really own this stock because it's unmatched anywhere else and think that ultimately Wall Street will reward the company for that over time. Sure. So, Patty, what's your reaction here? I think, Scott, this is a story about the consumer. You know, household debt is at 50-year lows.

The consumer, we all love entertainment. And the Parks Division certainly showed that, as has subscriber base. They did not go down as expected in spite of the $3 per month increase in costs you know it doesn't sound like much that's a 37% increase just on the existing subscriber base and the fact that they didn't lose anybody is really telling to me but you do have to be concerned know about the let's call it the path to profitability for their direct-to-consumer business? Isn't it kind of, it's all about that at this point, is it not? No question about it.

But as we're seeing, Disney has pricing power. You know, it's very interesting when you talk to people on the street, young families. I was speaking with a young dad the other day, and he said, you know, I don't really like the fact that I have to spend $29 for a movie instead of $19, but I do it. So they do have that pricing power and the question is how they're going to use it. They are going to restructure, no question about it. You know, what did Bob Iger do the first day at work? That first day, 6.30 a.m., he ousted the head of streaming. So he's not wasting time. They are going to

refigure this business model. They are returning to profitability one way or the other. This is his legacy. All right. We'll get back to this conversation in just a moment because I'm told that Robinhood is now out. Kate Rooney has that for us right now. Kate. Hey, Scott. So it's looking like a miss on the top and bottom line for Robinhood and some headlines coming out of this release. I want to start with the top line, though. Revenue coming in at about $380 million. That was roughly $17 million shy of expectations. EPS loss here, $0.19 on the loss. It looks like it's about $0.05 short of what the street was looking for. Robinhood saying that that wider than expected loss was in part the result of what the street was looking for. Robinhood saying that that wider than expected loss was in part the result of what they're calling a processing error. I spoke to the CFO of Robinhood, Jason Warnock. He told me that there was essentially a mistake by the company on a

reverse stock split on the trading app last year. He said that resulted in higher charges. So we'll expect to hear a lot more about that on the call. We also had news that the founders are forgoing a pretty big payday. They're canceling about half a billion dollars in stock-based compensation. That should help cut operating expenses and lower some of the dilution when it comes to stock-based compensation. Operating expenses were also down in the quarter. And then finally, some FTX-related news as well. The DOJ had seized more than $400 million worth of Robinhood shares that Sam Bankman-Fried, the former CEO and founder

of FTX, had bought back in May. It's been disputed in bankruptcy court. Robinhood's board, though, approved a plan to buy back those shares, the CFO telling me that they're working with the DOJ on a way to make that happen, stock up more than 7%, it looks like, likely due to that lower operating expense and some of the the caution here on the expense side and belt tightening that we're seeing from Robin Hood. Back to you. OK. Yep. Let us know if there's anything else. Kate Rooney, I appreciate it very much. Let's get back to our conversation on Disney again. We think we're about 15 minutes or so away from the conference call, which is really, Brenda, going to be the most critical moment of this

evening. And then, as we said, and I'll just reiterate it once again, that David Faber is going to sit down tomorrow morning with Bob Iger. So you're going to have an exclusive interview tomorrow, but you're going to get some news tonight ahead of that. So what do you specifically want to hear from Mr. Iger on this call, Brenda? Well, I think he needs to lay out the path to profitability for the streaming business um now i don't think he's going to have all the answers right away but at least if he has a vision and and will also potentially learn you know previously the target had been to be profitable by 2024 if that changes at all that's going to be an important topic of conversation for better or

for worse uh but i would hope it would be for the better. We talk about really creating content that is valuable and that is where they're going to get the bang for the buck for spending money on the creativity piece and be able to cut costs where they can. I think that is the single most important part of the conversation. The other parts of the business all are doing incredibly well. And I think, you know, we think back to when Disney first launched this direct-to-consumer streaming business. Everybody knew this was going to be, you know, operating at a loss for a while. But I think it's transformative for the company overall, that we just need to get to that profitable place. And so I think

when we have more of a vision of when that's going to be, that's going to be a great catalyst for the company. Patty, let's keep in mind, too, I mean, the DTC subscribers declined sequentially. Now, it wasn't a huge decline and they may be up tremendously year on year, but they declined sequentially quarter on quarter by about one percent. They still have, you know, this pitched battle with so many other DTC players that they have to continue to add subscribers and they have it and they have to do it profitably. I think for me, Scott, one of the things that I'm going to be listening for is what his expectations are for exactly that subscriber base. One of the mistakes I think his predecessor made was being a little too optimistic. And so there was a credibility issue with Chapik. Iger doesn't have that. So it'll be very interesting to hear what his outlook is and how he's going to fix

some of the issues that they are facing. Let's face it, they're all in the same place. Netflix is in the same situation. They had a horrible earnings call in January. So it's a business model problem. And people like Augur and their board are going to figure out how are we going to make this part of our business, which frankly is a lot more diversified than their rivals. How are we going to make this more profitable so that we're profitable, period, so that overall it's contributing instead of detracting from the other entities? All right. So let's let's get back to Kate Rooney. A firm is out as well, a stock that's been up tremendously to start this year. Kate, what do we see here? Hey, Scott. So it's looking like a miss on the top and bottom line. EPS was a loss. It was a 12 cent miss on EPS. Dollar 10 Street was looking for 98 cents. Revenue also a miss here. 400 million dollars versus the 416 that

the street was expecting. Also some news here, Scott, that Affirm is cutting 19 percent of its workforce with the latest tech company to go through these rounds of layoffs and cost cutting. We do have guidance here. Not immediately clear if that's comparable or weighing on the stock. Also looking at loan loss provisions and delinquencies, which is something that analysts were focused on.

We don't have a comparable number quite yet, but it was a miss on the top and bottom line for a firm and shares are down more than 18% here after hours. Back to you. Yeah, we had said the stock was up a lot going into the number. So maybe that's a little bit of what you're seeing. Kate Rooney, thank you very much. Patty, I want to get back to you. You mentioned the call. You mentioned the board is going to going to figure this out. Should that board include a new member by the name of Nelson Peltz? That is a great question. I think it's fascinating to really understand where he's coming from. One of the biggest criticisms he has is related to

the succession plan that Iger had. And now here we are. He's trying to implement his own succession plan by trying to get his son, Matt, on the board of directors at Disney. I don't think he's going to be successful. I don't think he should be successful. I do think that what he's doing is actually quite effective, though, because it's really forcing the board to zero in on what the issues are. So, yes, he wants it. No, he's not going to get it. Brenda, should he get it? Because there are many out there who suggest that he may be just the right person to shake things up enough that they can turn this around.

I mean, when you have a CEO like Iger who has come back and he himself is embarking on what is a restructuring plan, why not have somebody, you know, in the room with you, so to speak, to help you do that? Well, I think with somebody like Bob Iger, who's a known entity, he's been highly successful in managing this business before. Now it's changed since he was there last, but he's been highly successful in the past. I think he can probably pull it off without having Nelson Peltz's son on the board. And what I do hope is that this doesn't turn into a major distraction for Bob Iger in terms of his own vision of how to improve the profitability of various parts of this company. But I think overall, Nelson Peltz has brought to light just all the reasons why

Disney is such a differentiated company and story and why there is so much value there that I hope overall it is ultimately realized by the market. But I don't think that he necessarily needs to be a part of it in terms of having a board seat. Do you think the succession concerns that that Pelts and I'm sure some others might have are warranted? I do. You know, two years is going to go by really quickly. So I think he's already identifying a group of four people who one of those may ultimately be his successor. But only time will tell. And it's this is the first quarter out of the gates. I don't think he's going to have any answers right away. But certainly over the course of the next six to nine months we really need to see somebody ultimately being groomed for this position if it is going to happen with someone internally, which I think is the most likely scenario. But I think it's too early to ask that just yet. But certainly, you know, three or four quarters from now, absolutely, we should start to see some sort of progress there. Let's just recap as well what we're talking about here. We did have beats and the stock, as you see, is up a little more than

2 percent here. We think we're 10 minutes or so away from the beginning of the conference call, one in which Bob Iger will be participating in. He has already made, as you probably heard from Julia Borson, these comments in the earnings release, but really lacking specifics in what more could be coming in terms of this transformation that he says is going to be significant. They're embarking on that one that Mr. Iger says will be will maximize the potential of our world class creative teams and our unparalleled brands and franchises. So we'll see what comes out of that conference call the moment it does. You have been wondering, Cameron, yourself, as you have referred to Bob Iger as this white knight coming back to try and fix this storied brand. Yeah. And I think that this quarter may give enough to keep the wolves at bay, meaning the activists at bay. Because what the big challenge will be is how can you control costs and prioritize creativity?

They spent $30 billion in content last year. So what's the return that they're getting on that content? And so I think that as they navigate through this, we're seeing the impacts of the cost cutting, the less loss that you're seeing within the direct-to-consumer business. That has to continue if Bob Iger wants to not have Pelts on the board. Brenda, you want to hear more on the cost cutting side? Do we hear more on layoffs? Are you going to spend as much on content in this grab for subscribers, which every DTC company on planet Earth is trying to do?

I think we need to hear some more details today. We may not get all the details we're hoping for, but I think we need to hear a plan and again, kind of a timeline to profitability today on the call. So that's what we're looking for. Patty, I'll give you the last word on Disney before we move on. I think that this year is going to be very interesting. It's going to be a roller coaster ride, kind of like one of the Disney rides. Lots of chills and thrills and maybe a bout of nausea from time to time. But I think when it's all said and done towards the end of this year, I think we're all going to be really happy we hopped on this ride. Disney's going to do just fine. They're going to lead this whole sector

out of what is an earnings recession overall. All right. There's the stock up about two and a quarter percent as we await that conference call for 30. Ladies, thank you. We'll talk to you soon. Brenda and Patty and Cameron, I know we'll see you back here on the desk shortly. Let's get to our Twitter question of the day. We want to know, should Disney put Nelson Peltz on the board? You can head to at CNBC Overtime on Twitter. Vote yes or no. We'll share the results later on in our. We are just getting started here in overtime. Up next, the market's magic number.

Top technician Jonathan Krinsky says stocks are nearing a, quote, critical juncture. The key level he is now watching. And as we've said, we are just moments away from Disney's conference call. It's Bob Iger's first since returning as CEO. We're ready to break in with any big headlines over time. It's right back. We're back. MGM earnings are out.

Back to Contessa Brewer in Las Vegas with those numbers. Contessa. Scott, MGM beats on the top line, misses on the bottom. The big headlines here, best year ever for MGM's Las Vegas and the regional properties in the United States. In Vegas, last year's EBITDA, remember that's the crucial earnings metric in gaming, up 81 percent over 2021. And listen, 2021 was a very good year. MGM says in its release, Macau has already this year returned to profitability. That's an incredible turnaround. We're seeing the stock up about two and a half percent right now. The call getting started at 5 p.m. Eastern

Time, Scott. All right. Best year ever. That's the headline. Contessa, thank you. Contessa Brewer back in Las Vegas for us on MGM. The market meantime nearing a, quote, critical level. That, according to late day note today from top technician Jonathan Krinsky of BTIG, who joins us now. Welcome back. What is the critical level? Hey, Scott. Good to see you. So 4100 on the S&P 500. If you think about the last couple of months, we first tested it on December 1st. Then we tested it again on December 13th, that CPI day, both of which failed. And then we broke above it last week following the FOMC decision. So you have this classic case of multiple tests of resistance.

It broke out. Then we came back yesterday, tested it and held its support. But the issue is if we break back below it after several tests, you get what we really consider a false breakout. And from false moves in one direction can come fast moves in the other direction. So that's really the concern for bulls here. They haven't necessarily done anything wrong to this point, but we think some of the macro issues on the market suggest it actually probably will break in the coming days. And that's that's the risk here. So you're not ready to to declare the bear market over. I mean, you sound like you're not you're not a believer in this move. You know, I don't think so. I mean, I think, you know, you look at where the market is.

It's still, you know, maybe 150 points below where it was at the August peak, which in hindsight was also not the end to the bear market. And then from the August peak, we sold off about 700 handles in about six weeks. So, you know, things can change quickly. I think that the key issue for us here is that the entire duration of this bear market has been an inverse, the stocks of markets been an inverse correlation to the dollar, right? So if you think about from January to last September, dollar rallied, stocks sold off, dollar peaked in late September, stocks bottomed. And then so far, the dollar's put in a bottom last Thursday. And since then, stocks have seen some volatility. And so, you know, unless that correlation changes, you really need to see a weaker dollar to continue this equity rally.

And we think the dollar is in a pretty good macro support. Also, you have tailwinds from the bond market and what the Fed has been doing and saying. So, you know, we don't think there's a ton of downside for the dollar. And if there's not a ton of downside for the dollar, it's tough to see a lot of upside for equities here. You really you really don't see the dollar as continuing to to weaken. I mean, it kind of just started, right? Well, it had a pretty big pullback for currency terms from September to last Thursday's low. And then again, if you look at kind of the five to 10-year chart of the dollar, 100 on the dollar index, 100, 102 in that area, pretty good long-term support. So it would take a lot,

I think a pretty big regime change to break under that level. And again, when you have, you know, real rates and Fed fund rates pushing up to, you know, to in the case of Fed funds to new highs this week, you know, that continues to suggest we probably have upside pressure in the U.S. dollar. You know, I suppose technicians can read charts differently. Maybe they look at the same thing and they come away with different conclusions. Now, I raised that issue because it was only a couple of days ago that Mark Newton of Funstrout, their technician, was sitting next to me suggesting that this rally has legs and that technology has big legs. Do you disagree with that second notion about this run that we've

seen in tech being able to carry the market further? Well, look, tech is still the largest part of the market. It underperformed for the majority of last year, and it's been outperforming the majority of this year. But I think if you look at some of those structural trends, both in absolute and relative terms, they are coming into some pretty key resistance levels. And, you know, we take away to the evidence approach. If you were to look at some charts purely in a vacuum, you could argue they're starting to potentially see a bullish trend change. But we can't ignore the fact that correlations do exist. The macro environment is still the dominant trend for markets right now. And when you put it all into kind of the macro cocktail blender, it still doesn't paint a rosy picture for us. But look,

again, we mentioned that 4,100 level. If we spend some more time below that, and especially if we're to break out about 4,200, that would be another hit to the bear case. So it's going to be an interesting week, especially as you head into CPI next week. I think we'll know a lot more. We don't generally talk individual names with you, but I just want to quickly, CBOE is one that you specifically point out in this note that looks pretty good to you. Yeah, I mean, look, if you think about just the macro backdrop for CBOE, volatility should persist. Option trading, we know, has been a huge part of the market. But just from a chart perspective, this chart spans back five years or so. Pretty

nice constructive base, decent relative strength there. So that's a name that we can get behind. It's not super extended, and it's got some macro tailwinds behind it. All right. Good stuff, Jonathan. Thank you. Busy day for us here in overtime. And I appreciate you coming on. That's Jonathan Krinsky, VTIG. It is time for a CNBC News update with Christina Partsenevelos. Christina. Hello, Scott. Here's your CNBC News update at this hour. The Turkish government is facing mounting criticism that it responded too slowly to Monday's devastating earthquake. Some survivors huddled around campfires as temperatures dipped well below freezing. President Erdogan has admitted there were some initial problems, but promises no one will be left homeless. The death toll across Turkey and Syria has gone above 12,000, with another 78,000 injured. The Pentagon is acknowledging Chinese spy balloons have flown over the United States in the past.

A spokesperson says they're aware of four such flights before last week's that ended with the balloon being shot down by a U.S. fighter jet. And in South Carolina, a bomb threat interrupted the double murder trial of Alex Murdaugh. The packed courtroom was evacuated so the threat could be investigated. The trial resumed after a break of about two hours. Scott, see you soon. All right. Yep. Christina, we'll see you in just a bit. Thank you. Christina Partsanova. That Disney conference call is now two minutes underway. We're dialed in, of course, ready to bring you all of the big headlines that emerge from it. Plus,

we do have more reaction to the report from another Disney shareholder. We're back in OT right after this. All right. We're back in overtime, taking another look at Disney. The company's conference call is underway as we speak. Stock is up 3% or so here in overtime. Let's bring in Neuberger Berman's Kevin McCarthy. He manages the firm's next generation connected consumer ETF, does hold shares of Disney. So give me your reaction first to what they reported. Great. Thanks, Scott. So I think, you know, we our expectations going into this weren't overly prescriptive. You know, I think there's a lot of fluidity in the backdrop with what's going on with the management and with what's going on with their DTC platform. So, you know, I think we were generally looking for high single digit revenue growth and

something in the high teens, you know, profit declines. And they were able to inch out a little something better than that. So we're excited to see the results. So I'm trying to think of, you know, the bigger picture view here. If you consider that these results in many ways were Bob Chapek's results, right? Mr. Iger has just come back. So the conference call is underway as we speak. What do you want him to do? It's a good question. I think the onus is on Bob right now, Bob Iger right now, to do three things.

One, address the DTC platform and specifically spell out the path to profitability. Doing that, understand, describe exactly why and what the appropriate level of subscribers are for an addressable market, explain why the price increases are low-hanging fruit for them, and articulate this path kind of hopefully before the end of fiscal 24. And I think most importantly, it needs to be a very credible, data-supported insight that investors believe. The second piece of the equation is the cost-cutting side. So we can speak to that. They've got about $18 billion or so in non-programming, non-part-part costs. Every billion is about $0.45 in EPS. That could be something that I think is

going to get a lot of attention. And then also, he doesn't have to have necessarily an answer in mind for the linear TVs or the linear networks. But I think it would behoove him to kind of speak to addressing a plan there. What do you want to see in terms of the board makeup? I mean, that's the issue that's overhanging this whole story now. As Tryon's waging this proxy fight, they want a seat on the board. You know, some would suggest that, well, Chapek wasn't making decisions in a vacuum

that maybe the board is as responsible in some ways as Mr. Chapek has deemed to have been in some of the decisions that were made. Do you think Peltz should be on the board? I think Bob Iger has had a terrific career over many years and created tremendous shareholder value. And it would probably behoove investors to see what kind of plan materializes there over the next 18 to, you know, 12 to 18 months. Now, having a, you know, an activist like Nelson Peltz on the sidelines probably puts a floor on the stock, which we like.

And, you know, and so that's something that, you know, it's always important to keep the dial up on pressure there. But for the time being, I think we need to let Bob see how their plan unfolds. Well, we'll see how he's talking about that. I'm sure he's going to be asked about it on the call, which is going on as we speak. Kevin, thank you. We'll see you soon. That's Kevin McCarthy, Disney shareholder, Neuberger Berman joining us up next. Another check on shares of Wynn. That stock is higher in the OT by about 4%, as you see on earnings call there underway as well. Wynn shareholder, Jim Labenthal, he's on the call. He's going to hop off and give us his quick take after this break. He's a Disney shareholder, too. We'll be sure to ask him about that next.

Getting some big headlines out of Disney's earnings call. Let's get right back to Julia Borson with that. Julia. Scott, Disney CEO Bob Iger kicking off the call by announcing a restructuring. They're going to be restructuring Disney into three new core business segments. The first one is Disney Entertainment. That includes all TV, film, both streaming and direct-to-consumer, basically all content with the exception of ESPN. That division will be co-run by Alan Bergman, who's the longtime Disney studio chief, and Dana Walden, who's been running the TV division. This new ESPN division, which includes both streaming and linear and international sports, will be run by longtime ESPN chief Jimmy Pitaro. And then

there's the third division, which is parks, experiences and products. Same same division that they've had for a while now, and that is run by Josh DeMauro. Iger going on to talk about how this new leadership structure aims to return authority to creative leadership, to make those same leaders accountable for how their content performs financially and to enable creative teams to determine how they're making content, how it's distributed, monetized and marketed, saying that this structure will be implemented immediately, but they won't start reporting that with this structure until the end of the fiscal year. Now, another key thing here, Eiger announcing they're targeting five and a half billion dollars of cost savings across the company,

two and a half billion dollars of cost savings across the company. Two and a half billion dollars of that will be non-content costs, saying that one billion of that is already underway. The remaining three billion dollars in savings will come from reducing content spending when it does, but not including sports. So reducing non-sports content spending. Also announcing that as part of this this they will be laying off 7 000 employees Iger saying this is a decision he's not making lightly also announcing as part of this restructuring they will no longer be providing subscriber guidance for their direct to consumer business as they focus on growth and profitability but he did reiterate the goal and the target of hitting profitability for the Disney Plus business by the end of fiscal 2024. Scott, the call is continuing and I'm going to dial back into it now.

Just real quick. So he's taken a page out of Reed Hastings book, right, with no more sub guidance. That's number one. And number two, are you surprised by anything that is part of this restructuring into three core units? You know, I think this really makes sense here. We've talked a lot, Scott, and we were discussing it earlier, this idea that he wants to put the creative control back. You put all the financial decisions back and aligned with creative control. And so this idea that he's really reversing what Bob Chapek did. Bob Chapek was about separating out the content creation business from the content distribution business. Iger says that doesn't make sense. You need to have financial accountability and you need to incentivize the people who are making the content to come up with the decisions that are going to be the wisest and most fiscally responsible in

terms of how to monetize that. So aligning those interests very much makes sense to me, particularly understanding how important content is as a creative engine for Disney. Iger saying in the call that everything about Disney, pretty much everything about Disney originates with the power of its content. And then I think that looking at the people who are running these divisions, it very much makes sense. And I think that the cost cutting is in line with what what a lot of people were looking for, pulling back on the content costs and also trying to figure out some other streamlining. They didn't give that much detail about the cost cutting, but I'm sure we'll hear a little bit more on the call, which is I see what I what I see to this point is like two and a half billion in cost cuts and three billion, three billion coming in cost savings out of content. In the content business. Yeah. So

non-sports content cost savings. So the question there is, is that because they're going to be spending less on content just for Disney Plus? Is it going to be more about trying to pull back in other parts of the business or is that going to really be about achieving profitability for Disney Plus? So I think that's a key question that'll surely be asked by analysts on the call. All right. I'll stop asking you questions so you can get back on the call. Julia, thank you so much. It's Julia Borson with the latest there. Let's bring in on the CNBC Newsline Disney shareholder Jim Labenthal for his reaction. So, Jimmy, what do you think here? I got to give you a disclaimer, Scott. You know,

I was on the Wynn Resorts call, so I'm really kind of listening to Julia and getting some of this information for the first time. Here's what my thoughts are. Of course, you know, you like the beats on the numbers, but I think there's a question that I have that needs to be answered, which is, okay, we're going to make all these cost cuts. Is that in the long run going to hurt the path to profitability and the trajectory of profitability after that? I don't know the answer. I'm going to have to dive into that. I want to listen to what the analysts, I'll listen to the replay and I'll listen to what the analysts ask. But that's a legitimate question. Aren't you, wouldn't the cost cuts help in the path to profitability? I'm a little confused. Yeah, I mean, they can, yes, in the short term, they will. The question is, does it hamper the long term growth of the business?

And that's just an honest inquiry that I'm putting out there. I don't have the answer because I haven't dived into this yet again because I've been on the wind call. You know, the submiss, I guess I can explain that away by what I read of, you know, the Indian cricket rights going away. But you don't like to see subscribers go down. I didn't like that when Netflix did that a couple of times last year. I don't like to see it now. Now, look, the stock's up 8 percent. So I don't mean to look a gift horse in the mouth. I'm just telling you honestly what my question is. Are these cuts good for the short term, but at the expense of the long term? That's a question I have to answer. Are you raising that issue because you're worried about being able to grab more subs

for the direct-to-consumer business? And by cutting costs in general, especially on the content side, you're worried about their ability to grab subs? That's exactly right, Scott. That's exactly right. Now, and when I say worried, or I agreed with you on worried, I have to be clear. This is for me right now an honest inquiry. This is my first response to this. I see the stock's up 9%. I should probably keep my mouth shut. But I'm always thinking about this. And I'm always thinking about what could go wrong in any stock. So this is a question that I have to take some time to answer. You've also suggested, haven't you, that you think that Peltz should get a seat on the board to help in this significant, I'm using Mr. Iger's words,

this significant transformation that this company is undergoing? I definitely do. And there's a lot of moving parts of the company right now. Look, I think Mr. Iger has a better handle on the content creators, the actual people, than Mr. Chapek did. So that's probably a plus for the organization that they're doing. But as I said to you earlier today, how can it hurt to have Mr. Peltz on the board? I don't see how it can hurt. All right, Jimmy, give me a quickie on the MGM call, which or when, which you were on. I'd like to get your quick take on that. Yeah. And a couple of points here. One, Macau is going better than expected. That's really what

has popped the stock. The other thing is for the third quarter in a row, Mr. Billings, the CEO, has said, look, we're ready for this macro downturn that everybody's talking about, but we simply don't see it in our forward bookings. Forward bookings are very strong here in the U.S. and Las Vegas and Boston. That's the third quarter in a row he's said that. Jimmy, going to run. I got a little bit going on here, here in overtime tonight. I appreciate you calling in. It's Jim Labenthal joining us on the Overtime Newsline. I just made that up. We're just calling it that from now on. Coming up, we're tracking some other big stock moves here in overtime. Christina Partsenevelos is standing by with that, Christina. Well, let's start with activist

shareholder Third Point taking a stake in a big tech company and shares are rising. And the important December holiday season bringing conflicting fortunes to two different retailers. I'll explain next. Tracking the biggest movers in overtime, Christina Parts and Novelos is back with that. Christina. December holiday sales, Scott, weren't enough to offset the weakness Mattel saw for the sale of its Barbie and Thomas and Friends toys in October and November. Even when accounting for currency fluctuations, Mattel saw sales drop 19% throughout the quarter.

The CEO saying the macro environment was, quote, more challenging than anticipated. Mattel's results come after rival Hasbro recently warned that customers actually pulled back on spending during the holiday season, and that's why Mattel shares are down, look at that, a whopping 10% right now. And unlike Mattel, Sonos, which as you can say, the toys for adults, was able to ride the holiday season, posting a Q1 revenue beat after a, quote, tremendous holiday period. So kind of the opposite of what we saw with Mattel.

CEO attributes the success to a well-stocked inventory, which helped meet demand. Despite that big beat, though, what stood out to me and Robert Hum, one of our producers here, the maker of high-end wireless speakers, only reaffirmed its full-year guidance. It didn't actually increase it. Shares, though, up almost 15 percent higher. And last but not least, Salesforce has a fifth known activist shareholder. Dan Loeb's Third Point has taken a stake, according to a new report in the last few minutes that we just got from The Wall Street Journal. Shares are climbing right now, you know, up eight-tenths of a percent right now in the overtime on the news.

But third point joins Elliott. And this is what we're seeing on our graph right here. Elliott actually took a stake on January 23rd. Hence why you're seeing shares climb or had shares have climbed 13 percent since that moment. Joining Starboard Value and Jeff Ubin's Inclusive Capital shares are up nearly 30 percent year to date. So another activist joins the board. Yeah, wow. All right, Christina, thank you very much for that. Still ahead, Santoli's last word. We get his first take on Disney, what he is watching in the day ahead.

We'll get his take on Loeb and Salesforce, too, for that matter. We're back right after this. The results now of our Twitter question. We asked you, should Disney put Nelson Peltz and Tryon representative on the board? The majority of you saying no. 53 to 46. Still pretty close as we continue to go over these results. The conference call, of course, with Disney.

Bob Iger still underway in which he announced just a few moments ago saying the board will consider a reinstatement of the dividend by year end. So we have the restructuring, three core business segments. We gotstatement of the dividend by year end. So we've got the restructuring three core business segments. We got to talk about the dividend. What's your take here? I think a credible path toward getting costs in line and essentially getting to streaming profitability is most of what people wanted to hear. The five and a half billion dollars in projected cost savings. It's a pretty big number. I mean, it's three dollars a share pre-tax. So, you know, if they get to that, you know, it's going to be a little bit of a tailwind. The dividend strikes me as a statement of, you know, we're going to be back in normal times here. You know, they eliminated the dividend

during the pandemic. Disney was always a dividend grower in the past. I'm sure it's going to be token level initially. Then you grow it from there. So all around, I get the market's reaction here, which is you wanted to see sense of urgency on the operational front. The restructuring, I think, was more or less telegraphed in terms of, you know, placing those content executives with more direct responsibility. Let me just remind people, too, you can see Bob Iger's picture on our screen because they do have that interview tomorrow. Bob Iger and David Faber on Squawk on the Street. It's an exclusive. Obviously, you don't want to miss that. Let's turn to the market. What do you make of today, the way we traded? I think it's still part of a little bit of a digestion process. The fact

that you go 8% down in Alphabet, though, is an interesting wrinkle. Yes, you're only down to levels reached a week ago. But it shows you that I think we got wound pretty tight in some of these stocks. And there's a lot of emotion running through these areas that should be just these stable mega caps. So maybe you have to have some of that boil off in the short term. Otherwise, not to me a big macro message in today's action. Yeah, we got a little blip higher in very short term rates. People are kind of bracing for next week's CPI. I'm thinking just to see if that's going to change the general premise of exactly what rates have to go. Well, the jobs report last Friday sort of woke everybody up to the idea of another, at least another cut than maybe they were expecting.

It has people listening more. I mean, a hike. Yeah, listening more to the too hot side rather than the too cold side. And, you know, clearly we can't assume Goldilocks. But I think that's where we are, bouncing between those two scenarios right now. I keep saying another 2% to 3% downside in a pullback in the S&P is not a big deal. But I think people are highly sensitive because we're not that far from that area where you'd say, oh, just another bear market rally. All right. Good stuff. I'll see you tomorrow.

All of you, too. Fast monies now.