Rebecca Campbell, who was employed as Disneyland resort president for less than a year, has decided to quit the Walt Disney Company just days after Iger announced huge job cuts during a quarterly earnings call with investors.
Disney CEO Robert Iger presented the job cuts as a reason to celebrate, saying, “It’s time for another transformation.” Further, Iger said, “I have enormous respect and appreciation for the dedication of our employees worldwide,” even though 3% of Disney’s 220,000 workers will be losing their jobs.
The layoffs are being done with a reorganization that Iger said was important to snip costs that will “fully materialize” by the end of 2024. Out of the $5.5 billion in cost savings, $2.5 billion are in “non-content” aspects of the corporation, such as marketing (50 percent), labor costs (30 percent) and technology (20 percent).
It is noteworthy that Disney is taking advantage of the climate of mass layoffs hitting the technology, financial and other sectors that had huge losses in the past year to go after the jobs of its employees while the company had a profitable quarter.
The 7,000 layoffs were announced even though Disney reported revenues of $24.5 billion in the quarter that ended in December, an 8 percent increase compared to last year, and earnings rose to $1.28 billion from $1.1 billion a year ago, beating analysts’ projections. However, the all-important per share earnings category fell to 99 cents from $1.06 last year.
Disney’s investors have probably considered the fact entertainment company’s streaming service Disney+ lost 2.4 million subscribers in the last quarter, primarily with losses in India and parts of Southeast Asia, and this direct-to-consumer business lost $1.05 billion, which was also below Wall Street projections. Since it’s launch in 2019, Disney+ has lost a total of $9 billion in the battle to gather subscribers in the overcrowded video streaming marketplace.
Like nearly every publicly traded company in 2022—among the exceptions are the oil and health care industries—Disney lost more than 40 percent of its stock value last year. Its major investors, such as Vanguard Group (assets under management of $8.1 trillion) and Black Rock (assets under management of $8.5 trillion), are demanding draconian measures aimed at getting their money back.
Source: USA Today
Typical of business news reports on the Disney reorganization plan is the one published by The Motley Fool that said, “But perhaps the most important piece of information from the report for dividend investors was news that the company plans to reinstate a regular cash payout later this year.” The report quoted Disney’s Chief Financial Officer Christine McCarthy at the investor call who said the dividend payout would occur at the end of 2023.
While so many employees are about to lose their only source of income, McCarthy told investors not to get too anxious about the size of their payouts. “The amount will likely be a small fraction of our pre-COVID dividend with the intention to increase it over time as our earnings power grows.”
