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Friday December 4, 2020

Finances

Finances
 

Disney Reports Net Loss

The Walt Disney Company (DIS) released its fourth quarter and full-year earnings on Thursday, November 12. The entertainment giant posted a rare net loss for the full year.

Disney reported revenue of $14.7 billion for the quarter, down from $19.1 billion during the same quarter last year. For the full year, the company's revenue was down 6% to $65.4 billion.

"Even with the disruption caused by COVID-19, we've been able to effectively manage our businesses while also taking bold, deliberate steps to position our company for greater long-term growth," said Disney CEO Bob Chapek. "The real bright spot has been our direct-to-consumer business, which is key to the future of our company, and on this anniversary of the launch of Disney+ we're pleased to report that, as of the end of the fourth quarter, the service had more than 73 million paid subscribers – far surpassing our expectations in just its first year."

The company reported a net loss of $710 million during the quarter, down from $777 million in net income last year at this time. For the full year, Disney reported a net loss of $2.8 billion, down from $10.4 billion in net income for the prior year.

Disney's business was heavily impacted by COVID-19 throughout the year. All of the company's theme parks were closed for at least a portion of the year. In addition, Disney's cruise ships have not sailed since the second quarter. While Disneyland in California remains closed, Walt Disney World in Florida, Shanghai Disney, Disneyland Paris and Hong Kong Disneyland have each reopened to some extent.

The Walt Disney Company (DIS) shares ended the week at $138.36, down 1.4% for the week.

Cisco Posts Quarterly Earnings


Cisco Systems Inc. (CSCO) reported its latest quarterly earnings on Thursday, November 12. The technology company's revenue and profits fell year-over-year.

The company's revenue reached $11.9 billion for the quarter. This was down from $13.2 billion during the prior year's quarter.

"Cisco is off to a solid start in fiscal 2021 and we are encouraged by the signs of improvement in our business as we continue to navigate the pandemic and other macro uncertainties," said Cisco CEO Chuck Robbins. "Our focus is on winning with a differentiated innovative portfolio, long-term growth and being a trusted technology partner offering choice and flexibility to our customers. We see many great opportunities ahead as every company in every industry is accelerating its digital-first strategy."

Net income for the quarter was $2.2 billion. This was down from $2.9 billion last year at this time.

The San Jose, California-based company offers a variety of networking software and solutions. Among Cisco's products, the Infrastructure Platforms segment brought in $6.3 billion during the quarter. This was followed by Applications with $1.4 billion and Security with $861 million. The company's Services segment saw revenue of $3.3 billion.

Cisco Systems Inc. (CSCO) shares ended the week at $41.40, up 3.7%.

Energizer Holdings Reports Earnings


Energizer Holdings, Inc. (ENR) released its latest earnings report on Thursday, November 12. The company reported increased revenue but a net loss for the quarter.

Net sales came in at $763.0 million for the quarter, up from $719.0 million in net sales during the same quarter last year. For the full year, the company reported net sales of $2.74 billion.

"The continued elevated demand for batteries and the recovery of the auto care business resulted in our fifth consecutive year of organic growth. Throughout the pandemic, our focus has continued to be on the health and safety of our colleagues and meeting the needs of our customers and consumers," said Energizer CEO Alan Hoskins. "Doing so resulted in higher costs and ultimately lower earnings. We believe that the value of our relationships with our customers far outweighs these short-term costs."

Energizer Holdings posted a net loss of $55.6 million for the quarter, down from net earnings of $41.9 million during the same time last year. For the full year, the company reported a net loss of $109.5 million.

The company, known for its namesake Energizer brand batteries, also holds brands such as Everready, Rayovac, ArmorAll and STP. Energizer's Batteries segment brought in $579.5 million in net sales during the quarter. This was followed by $142.7 million in the Auto Care segment and $40.8 million in the Lights and Licensing segment.

Energizer Holdings, Inc. (ENR) shares ended the week at $42.21, down 10.9% for the week.

The Dow started the week at 29,468 and closed at 29,480 on 11/13. The S&P 500 started the week at 3,583 and closed at 3,585. The NASDAQ started the week at 12,047 and closed at 11,829.
 

Treasury Yields Rise

Yields on U.S. Treasurys rose early in the week following reports that a COVID-19 vaccine may be ready in the near future. This increase in yields was tempered late in the week, as virus cases in the U.S. continued to rise.

On Monday, Pfizer announced that its COVID-19 vaccine may be 90% effective against the disease. The company has tested the vaccine on more than 40,000 individuals.

"Operation Warp Speed has made sure Pfizer has access to supplies needed to help administer and distribute the vaccine," said Alex Azar, Secretary of Health and Human Services. "That includes needles, syringes, PPE needed for administration, as well as dry ice needed for distribution."

The benchmark 10-year Treasury note yield opened the week at 0.815% and rose to 0.971% on Monday. The 30-year Treasury bond yield opened at 1.607% and jumped to 1.760% on Monday.

Despite the promise of an impending vaccine, yields dropped on Friday as coronavirus case numbers continued to rise. Over 150,000 new cases were reported across the United States on Thursday.

"We've got new cases at a record level. We've seen a number of states begin to reimpose limited activity restrictions, and people may lose confidence that it's safe to go out," said Federal Reserve Chairman Jerome Powell. "We've said from the beginning that the economy will not fully recover until the people are confident that it's safe to resume activities involving crowds and people."

The 10-year Treasury note yield closed at 0.89% on 11/13, while the 30-year Treasury bond yield was 1.65%.
 

Mortgage Rates Increase

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, November 12. Rates rose this week, reversing a recent trend.

This week the 30-year fixed rate mortgage reached 2.84%, up from last week's average of 2.78%. Last year at this time, the 30-year fixed rate mortgage averaged 3.75%.

The 15-year fixed rate mortgage averaged 2.34% this week. This was up from 2.32% last week. At this time last year, the 15-year fixed rate mortgage averaged 3.20%.

"Mortgage rates jumped this week as a result of positive news about a COVID-19 vaccine," said Sam Khater, Freddie Mac's Chief Economist. "Despite this rise, mortgage rates remain about a percentage point below a year ago and the low rate environment is supportive of both purchase and refinance demand. Heading into late fall, the housing market continues to grow and buttress the economy."

Based on published national averages for the week of 11/9, the national savings rate was 0.05%. The one-year CD finished at 0.18%.

Published November 13, 2020

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