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Disney Just Made Streaming Wars Even More Intense

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At its 2020 Investor Day, Walt Disney Company (NYSE: DIS) tripled subscriber projections for Disney+ by 2024. It also revealed it will raise the monthly price to $8 which the first price increase since the service launched last November, whereas Netflix (NASDAQ: NFLX) took two years before making such a move. Overall, Disney’s news were only another ground-shaking development in the streaming space. At the beginning of the month, Discovery unveiled its streaming service and AT&T’s (NYSE: T) Warner Bros. announced that its entire 2021 line of films will be released on HBO Max and in theaters at the same time. To say the least, things are getting interesting.

Record growth in subscribers

Disney+ now has 86.8 million paying subscribers as of December 2nd with Hulu counting 38.8 million, and ESPN+ gathering 11.5 million, making a total of 137 million paying subscriptions. Disney+ subscriber projections for the end of 2024 have been dramatically upped to a range between 230 million and 260 million. As a reminder, the guidance was 60 million to 90 million back in April last year.

Increasing costs

Disney announced 100 new projects, with most of them heading straight to streaming channels. In a four-hour presentation on Thursday, investors gained a preview of new original content coming to Disney+, Hulu, and ESPN+ in the next two years. But those content investments will make streaming even more costly for the legendary company. CFO Christine McCarthy revealed that losses from Disney+ are expected to peak in 2021, whereas profitability is estimated to be achieved by 2024.

Disney’s push into streaming includes a corporate reorganization to prioritize direct-to-consumer content, along with spending $8 billion to $9 billion on Disney Plus content alone in fiscal 2024, as part of $14 billion to $16 billion investment in direct-to-consumer content expenses across all three channels.

Disney+ was Disney’s silver lining during the pandemic

The pandemic has hit Disney’s theme parks and studio division extremely hard as the company swung to a loss of $710 million in Q4 that ended on October 3rd, 2020. This was its first quarterly loss since 2001 that contributed to a net loss for the full year of $2.83 billion. But even with lowered expectations, the comps are staggering. Theme parks lost $1.1 billion in Q4, whereas last year, they earned $1.4 billion in the comparable quarter. It lost $81 million for the year overall while in 2019, it earned a profit of $6.76 billion. Studio entertainment revenue shrank 52% in Q4 while profit dropped 61%. But Disney+ subscriptions were the silver lining as exactly one year after the streaming service launched, Disney+ captured the hearts of 73.7 million paying subscribers by October 3rd, exceeding even analysts estimates of 65.5 million. So, it should not be surprising this is the direction in which Disney intends to fire away at.

Roku is the winner

Roku, Inc. (NASDAQ: ROKU) shares rose last week after Citi raised its price target. Shares of Netflix might have done remarkably well this year, having climbed 53% so far but Roku’s stock has more than doubled Netflix’s performance as it gained 129%. The acceleration of cord-cutting during the pandemic resulted in a greater number of viewers for the platform’s ad-driven content, up 43% YoY to 46 million. The trend also drove advertisers that needed to respond to the new trend and Roku attracts the younger demographic of viewers that advertisers want, enabling Roku to grow revenue 73% YoY during the third quarter, driven primarily by platform revenue that surged 78% thanks to digital advertising, the Roku Channel, and licensing of its operating system for smart TVs. There is no argument concerning Roku’s potential as it only keeps benefiting from new entrants in streaming.

Don’t dismiss Netflix just yet

Netflix grew its paid subscriber base 23% YoY to 195.15 million last quarter, making it the world’s largest premium video streaming platform by a wide margin. Its revenue and earnings rose 25% and 73% YoY, respectively, in the first nine months of 2020. Moreover, free cash flow turned positive in the first quarter and continued increasing over the following quarters. Netflix expects its revenue and subscribers to both grow about 20% YoY in the fourth quarter. As for the full year, analysts expect its revenue and earnings to rise 24% and 52%, respectively. As for next year, expectations are 44% and 18% as this year’s success was fueled by the pandemic. Moreover, Netflix’s production of original content wasn’t meaningfully disrupted by the pandemic as it was mostly done before the lockdowns, whereas major Hollywood studios struggled with delayed productions and releases. But competition is intensifying. However, unlike Disney, AT&T and many other streaming service providers, Netflix’s streaming platform remains consistently profitable. Netflix’s scale, diverse portfolio, and robust growth rates easily justify its stock valuation.

Outlook

With quite a lot of dazzling and a pinch of corporate figures, the Disney ’s investor day presentation unleashed some serious artillery. As legendary entertainment and media company restructures its businesses to focus on creating a pipeline of content for its streaming services, it is aggressively ramping up production plans. Disney’s focus remains quality over quantity, something that has been its mantra for as long as it has been telling stories, whereas Netflix has an apparent high-volume approach.

Disney has sent a clear message to its fans: create space in your monthly budget for Disney-branded streaming services. As for the rest of the world and its streaming peers, Disney showed it its locked and loaded to win the world war in streaming.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Apple’s First Ever $100 Billion Quarter

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On the wings of iPhone 12 sales, Apple (NASDAQ: APPL) delivered its first and largest quarter of all time, crossing the symbolic 100 billion mark in one quarter. This is the YoY increase of sales for 21%. This is the company’s first quarter after introducing iPhone 12 family (the iPhone 12 mini, the iPhone 12, the iPhone 12 Pro, and the iPhone 12 Pro Max). But not only iPhone sales went up. Every other Apple’s product category showed an increase in double-digit percentages. Still, the main culprits for this sale super-cycle are the first 5G iPhone and the lockdown, so many consumers which held their older phones for some time just waited for the moment to upgrade to the latest mobile connectivity technology.

Q1 2021 results

In its fiscal Q1 2021, Apple managed to achieve revenues of $111.44 billion, instead of the estimated $103.28 billion. This is an increase of 21% YoY. Even the later start of sale of iPhone 12 and the closing of several retail locations due to the COVID-19 pandemic could not harm the all-time high iPhone sales that amounted to $65.6 billion. The previous record was achieved in the fiscal Q1 of 2018, when the iPhone sales reached $61.58 billion. Earnings per share were $1.68, while the estimate was $1.41. All other product categories also performed well. Service revenues were up 24% YoY, iPad revenues increased 41%, Mac revenues hopped 21%, and the story goes on. The gross margin was 39.8% which is much better than the expected 38%.

Facebook

Facebook (NASDAQ: FB) also delivered earnings beat with its fourth quarter results but the social media giant warned of impact from Apple privacy changes that are part of the iOS14 package. These looming changes along with a reversal in pandemic trends could harm its advertising business. Although its userbase in Europe increased from 305 million to 308 million daily active users, it fell In the U.S. and Canada, to 195 million daily active users from 196 million a quarter earlier which is why the company will be taking steps to reduce the political content on its platform.

Outlook

Although Apple did provide any guidance for the undergoing quarter, this has been the case since the pandemic started. Even with the lack of forecasts, the results speak for themselves. As its FAANG and tech peers, Apple had benefited from the pandemic as more and more people had to work or study from home. Not to mention that new Apple products don’t come that often and the pandemic has taken away a lot of pleasures we get to enjoy in, so Apple is well set to ride this super sale wave.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Working From Home Trend and Gaming Did The Trick for Microsoft

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On Tuesday, Microsoft (NASDAQ: MSFT) succeeded in beating forecasts far above expectations due to a boom in PC sales, increased demand for gaming and cloud services. The pandemic might have put a lot of constraints to its customers, but it also led to a structural change as businesses across the globe shifted to digital operations and saw it as key to increasing their resilience. Upon the results, Microsoft’s stock was up 5% in after-market trading.

Q2 2021 figures

Revenues increased 17percent as they amounted to $43.1 billion and exceeded $40.2 billion expected by Bloomberg. Earnings per share were $2.03, topping the expected $1.64.

The commercial cloud businesses which Wall Street sees as the main engine of Microsoft’s future growth is reaccelerating. These businesses that include Office 365 and Azure cloud platform, generated revenue of $16.7 billion in the latest quarter, which is 34 per cent up from a year before. At the same time, the launch of a new Xbox Series S and Xbox Series X lifted the gaming business as revenue of Xbox content and services was up a whopping 40% in the quarter. Personal Computing division was also up by 14 per cent as revenues amounted to $15.1 billion.

Meanwhile, the Productivity and Business Processes division reported revenue of $13.4 billion, which is a 13 percent increase. This growth was fueled by strong demand for Office 365 which grew 20 percent when adjusted for currency, which is line with the previous quarter.

Adding more fuel

Microsoft recently announced that it was investing $2 billion to be the preferred cloud provider of the General Motors (NYSE: GM) and Honda-backed (NYSE: HMC) autonomous vehicle firm Cruise. Under the agreement, Microsoft will provide cloud infrastructure for Cruise to better enable autonomous vehicles to navigate highways and surface streets in the future.

A sign of confidence

Microsoft also forecast revenue for the current quarter in the range between$40.35billion and $41.25bn. Themidpoint of the rangewould represent another quarter of 17 per cent growth, beating the 11 per cent that Wall Street forecasted.

Takeaway

Its strength in the cloud and personal computing enabled Microsoft to blow away Q2 expectations. As Mr. Nadella had put it, digital transformation is sweeping every company and every industry across the globe. Microsoft is powering this second wave of transformation that is even stronger than the first one as the world is now creating a new normal that will stay long after the COVID-19 pandemic becomes history.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

This Week’s IPOs

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This week has eight scheduled IPOs with three billion-dollar deals coming from bio tech, diagnostics, software and solar equipment, among others.

Biotech

The US biotechnology company that received emergency approval from the FDA for its COVID-19 antibody and antigen tests, Ortho Clinical Diagnostics (NASDAQ: OCDX), plans to raise $1.5 billion at a $4.9 billion market cap. This pure-play in vitro diagnostics business provides diagnostic testing solutions. It is profitable on an EBIT basis, with a revenue retention rate of 99% in 2019.

Customer-survey software

Qualtrics International (NASDAQ: XM) seeks to raise as much as $1.46 billion. It provides a customer and employee experience management platform to over 12,000 organizations. But, despite its sticky customers, it operates in a highly competitive environment with low barriers to entry.

Solar equipment supplier

Shoals Technologies Group (NASDAQ: SHLS) designs and manufactures products used in large solar energy projects. It is a profitable and growing company that plans to raise $1.0 billion at a $3.6 billion market cap. However, its growth depends on international growth and its track record abroad is not impressive.

Asset-light container liner shipping company

Israel-based ZIM Integrated Shipping Services (NYSE: ZIM) plans to raise $306 million at a $2.1 billion market cap. This company positions itself as a global leader in niche markets with competitive advantages that allow it to maximize its profitability.

Mortgage

Residential mortgage producer Home Point Capital (NASDAQ: HMPT) plans to raise $250 million at a $3.0 billion market cap. It utilizes a wholesale mortgage origination channel to connect with nearly broker partners, which allows it to serve roughly 300,000 customers.

Asset management

Brazilian asset manager Vinci Partners Investments (NASDAQ: VINP) plans to raise $236 million at a $944 million market cap. Its portfolio includes private equity, public equities, real estate, credit, infrastructure, hedge funds, and investment products.

Supermarket portfolio

Southeastern Grocers (NYSE: SEGR) plans to raise $134 million (100% secondary) at a $725 million market cap. The company itself won’t sell any shares as part of the offering and will not receive any net proceeds from its public debut.

Agriculture

Agricultural technology company Agrify (NASDAQ: AGFY) plans to raise $25 million at a $115 million market cap. This company is highly unprofitable but fast growing. It aims to differentiate itself with a bundled solution of equipment, software, and services that is optimized for growth.

By the looks of it, the 2021 IPO market seems to be continuing 2020’s momentum.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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