<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Disney (DIS) reported second-quarter sales that rose over last year, but earnings dropped and missed consensus expectations, in the shadow of the coronavirus pandemic throttling the global economy and battering Corporate America.” data-reactid=”16″>Disney (DIS) reported second-quarter sales that rose over last year, but earnings dropped and missed consensus expectations, in the shadow of the coronavirus pandemic throttling the global economy and battering Corporate America.

Here are the main results from the report, compared to consensus data compiled by Bloomberg:

  • Adjusted earnings per share: 60 cents vs. 86 cents expected, $1.61 Y/Y

  • Revenue: $18.01 billion vs. $17.68 billion expected, $14.92 billion Y/Y

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Disney’s fiscal second quarter comprised the first three months of 2020. During that period, the company’s theme parks were shuttered first in Shanghai and Hong Kong — and then throughout the world as the outbreak worsened. Those disruptions contributed to a 58% decline in operating income in Disney’s parks, experiences, and consumer products segment during the quarter, and caused previously announced furloughs of some 100,000 employees.” data-reactid=”21″>Disney’s fiscal second quarter comprised the first three months of 2020. During that period, the company’s theme parks were shuttered first in Shanghai and Hong Kong — and then throughout the world as the outbreak worsened. Those disruptions contributed to a 58% decline in operating income in Disney’s parks, experiences, and consumer products segment during the quarter, and caused previously announced furloughs of some 100,000 employees.

“Disney is built on shared group experiences. Until there is global comfort health-wise with that behavior again, Disney’s earnings are fundamentally impaired,” Richard Greenfield, Lightshield Partners media and technology analyst, wrote in a note downgrading shares of Disney to “Sell” from “Neutral” on Tuesday.

Wall Street firm MoffettNathanson also downgraded shares of Disney this week to “Neutral” from “Buy.” The call was an “admission that we believe the economic impact on the company will be longer than most anticipate, especially given the risks of a second wave of infections after reopening,” analyst Michael Nathanson wrote in a note.

Disruptions from the coronavirus pandemic also dealt blows to other parts of Disney’s media empire, including its media networks and studio entertainment segments. Disney’s sports channel ESPN has had to contend with sports events getting canceled or postponed amid the pandemic, and the release dates for a number of feature films, including the live-action “Mulan” and Marvel Cinematic Universe’s “Black Widow” were pushed back.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Disney+, the nascent streaming service, could be the lone bright spot in Tuesday’s report, however. The company revealed in early April it had already amassed 50 million subscribers in the five months since its U.S. launch.” data-reactid=”25″>Disney+, the nascent streaming service, could be the lone bright spot in Tuesday’s report, however. The company revealed in early April it had already amassed 50 million subscribers in the five months since its U.S. launch.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="However, competitor Netflix (NFLX) already appears ahead of the game. It reported a far greater jump than expected in quarterly subscribers in its own earnings report in late April, suggesting strong trends in streaming overall as customers seek out entertainment while sheltering in place.” data-reactid=”26″>However, competitor Netflix (NFLX) already appears ahead of the game. It reported a far greater jump than expected in quarterly subscribers in its own earnings report in late April, suggesting strong trends in streaming overall as customers seek out entertainment while sheltering in place.

Yet disruptions to filming and producing new content are posing new threats to streaming services, with social distancing orders still in effect across much of the country.

For Disney, “without far greater investment in content or a shift in strategy in terms of movie windowing, it is hard to see how ARPU [average revenue per user] can move up dramatically, especially overseas,” Greenfield said. “Scaling content investment will be even harder to achieve as Disney deals with the fallout of COVID-19 with content spend likely to be delayed/curtailed.”

Shares of Disney were down about 30% for the year to date through Tuesday’s close, underperforming against the broader market’s 11% decline.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="This post is breaking. Check back for updates.” data-reactid=”30″>This post is breaking. Check back for updates.

PARIS, FRANCE - MARCH 28: In this photo illustration, a remote control is seen in front of a television screen showing a Disney + logo on March 28, 2020 in Paris, France. At the request of the French government, the Disney + streaming platform has decided to postpone its launch in France to April 7. (Photo Illustration by Chesnot/Getty Images)PARIS, FRANCE - MARCH 28: In this photo illustration, a remote control is seen in front of a television screen showing a Disney + logo on March 28, 2020 in Paris, France. At the request of the French government, the Disney + streaming platform has decided to postpone its launch in France to April 7. (Photo Illustration by Chesnot/Getty Images)
PARIS, FRANCE – MARCH 28: In this photo illustration, a remote control is seen in front of a television screen showing a Disney + logo on March 28, 2020 in Paris, France. At the request of the French government, the Disney + streaming platform has decided to postpone its launch in France to April 7. (Photo Illustration by Chesnot/Getty Images)

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