Fourth quarter - Kivo Daily

Warner Bros. Discovery revenues miss the mark in 4th quarter

Scarlet Logan on February 27, 2023

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Warner Bros. Discovery – Numerous large corporations have released their fourth-quarter revenue reports in recent weeks.

Some have improved, while others have remained the same, and some have suffered major losses.

Warner Bros. Discovery is one of the corporations that reported a huge loss in the fourth quarter.

The news

Warner Bros. Discovery released a statement on Thursday, reporting a large loss of more than $11.1 billion in fourth-quarter sales, falling short of analysts’ expectations.

A lackluster advertising market can be blamed for some of the company’s decline.

Warner Bros. Discovery’s TV networks division shrank by 6% to $5.5 billion, with an emphasis on ad income.

TNT, TBS, and Discovery are among the cable networks affected.

Refinitiv compared the company’s report to analyst estimates:

Posted revenue: $11.01 billion, expected revenue: $11.36 billion
Posted loss per share: 86 cents, expected loss per share: 21 cents

In addition, Warner Bros. Discovery reported a $2.1 billion loss for the quarter.

The company’s stock dropped after hours as well.

Warnings

Earlier this summer, Warner Bros. Discovery Executives warned about a deteriorating advertising market.

Other media firms, such as Paramount Global, saw their earnings suffer as a result.

On the company’s results call on Thursday, Warner Bros. Discovery CFO Gunnar Weidenfalls, fundamental advertising trends slowed in the fourth quarter.

These were exacerbated by the shrinking viewership.

The Warner Bros. Discovery CEO David Zaslav also commented on the current macroeconomic situation, forecasting an improvement in 2023.

“We are assuming things will get better in the second half,” said Zaslav.

The business has been considering restructuring expenditures and impairment charges as a result of the Warner Bros. and Discovery merger in 2022.

At the same time, they were striving to steer its streaming business toward profitability.

Debt

Warner Bros. Discovery ended the fourth quarter with a balance sheet debt of $45.5 billion and $3.9 billion in cash on hand.

The company’s priority has been to reduce its debt and slash expenditures.

According to officials on Thursday, the company expects to continue its efforts to reduce a significant percentage of its debt from its balance sheet during the next two years.

The corporation repaid $1 billion in debt during the last quarter and $7 billion since the deal occurred in April.

“With the major restructuring decisions behind us, this year we are focused on building and growing our businesses for the future,” said Zaslav. “And we’re off to a great start.”

The streaming segment

The Warner Bros. Discovery is the parent company of two major streaming platforms: HBO Max and Discovery+.

According to the firm, its worldwide direct-to-consumer streaming user base increased from 1.1 million to 96.1 million at the end of the quarter.

On Thursday, the firm posted a 6% rise in sales.

The rise can be attributable to an increase in subscribers for its ad-supported tiers.

Nevertheless, losses in the streaming market have shrunk.

Warner Bros. Discovery lost $217 million over that time period, a $511 million improvement year over year.

Plans

In the spring, Warner Bros. Discovery will debut a bundled streaming service.

The business will have an investor walk-through on April 12.

According to prior rumors, the combined platform would be known as Max.

While there are plans to combine Discovery+ and HBO Max content under a single roof, Zaslav confirmed that the former will have its own streaming service, saying:

“We have profitable subscribers that are very happy with the offering of Discovery+, why would we shut that off?”

Earlier this month, Warner Bros. Discovery revealed that t he price of HBO Max’s ad-free subscription had been raised from $1 to $15.99.

That is the platform’s first price increase since its introduction in May 2020.

In addition, the corporation stated that it intends to invest in additional content and user experience.

Revenue

With last summer’s indications of a deteriorating advertising market, Warner Bros. Discovery has had an impact on its revenue.

Last week, Paramount Global reported a reduction in quarterly income due to decreasing ad expenditure.

Major athletic events particularly impacted the company’s network TV division.

Several networks broadcast college football and the FIFA World Cup during the fourth quarter.

Due to reduced TV licensing deals and fewer theatrical releases, Warner Bros. Discovery’s income for the studios division fell by 23%.

The fourth quarter of 2022 saw the release of Black Adam.

Meanwhile, several titles were published in 2021 over the same time period, including:

Dune
King Richard
The Many Saints of Newark
The Matrix Resurrection

Finally, David Zaslav disclosed that Warner Bros. Discovery has agreed to develop numerous “Lord of the Rings” films, which is one of the company’s most profitable properties.

Apple and Tesla stocks drop in 4th quarter

Alice Blake on January 5, 2023

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Apple: Apple and Tesla are two of the biggest tech entities in the United States, but they are currently dealing with problems with their stocks.

The two companies face significant headwinds in China, which concerns investors.

Apple’s shares fell more than 3% when concerns about the iPhone lineup in the December quarter grew louder.

Meanwhile, Tesla fell by 12% on Tuesday when the company reported that deliveries were below analyst expectations.

China’s influence

The two tech giants’ stock decline can be attributed to challenges occurring in China.

The country accounts for 17% of Apple’s sales and 23% of Tesla’s revenue, which makes it a significant market for the two firms.

Daniel Ives, the senior equity analyst at Wedbush Securities, addressed the companies’ woes, saying:

“China is the heart and lungs of both demand and supply for both Apple and Tesla.”

“The biggest worry for the Street is that the China economy and consumer are reining in spending, and this is an ominous sign.”

He continued:

“In 2022, the worry was supply chain issues and zero Covid-related issues, 2023 is the demand worry and this has cast a major overhang on both Apple and Tesla, which heavily relied on the Chinese consumer.”

iPhone factory problems

Investors are keeping an eye on Apple’s fiscal first-quarter results, which will likely be released later this month and cover the December holiday period.

In October, the largest iPhone factory in Zhengzhou, China, suffered a Covid outbreak.

Foxconn, which runs the factory, set restrictions.

By November, workers protested over a pay dispute, and many employees walked out.

Foxconn attempted to entice them back with bonuses.

Since then, things have settled down.

Reuters reported that the factory was almost back at full operations on Tuesday.

The situation highlighted Apple’s dependence on China for iPhone production.

Following the Covid restriction, the tech giants announced that the factory was operating at a significantly reduced capacity.

Fears

Evercore ISI analysts estimate Apple’s December quarter endured a $5 to $8 billion revenue shortfall.

However, Refinitiv consensus estimates the company could report a 1% annual revenue decline in the December quarter.

As a result, investors who expected a strong showing for the iPhone 14 have grown worried.

However, Apple faces more than just supply chain issues.

China recently overturned its zero-Covid policy in an effort to reopen its economy.

However, there have been Covid-19 outbreaks in large parts of the country, which could influence the demand for iPhones.

IDC research manager Will Wong addressed the issue, saying:

“The key challenge is expected to be on the demand side, especially since resilient high-end consumers may have started to shift their spending to travel while some may have shifted their focus to medical supplies.”

“The shift in spending will pose a key challenge in the short term.”

Tesla delivery

The Tesla share price drop occurred due to a miss in vehicle deliveries.

405,278 cars delivered in the fourth quarter fell below the expectation of 427,000 deliveries.

Demand in China and the supply chain played a role in the decline.

Throughout 2022, Tesla’s Shanghai Gigafactory endured Covid disruptions.

However, analysts also pointed out concern over Chinese consumer demand.

“Tesla will point to supply disruptions and lockdowns as the main problem in China in 2022,” said Bill Russo, the CEO of Shanghai-based Automobility.

“While these are real headwinds, it cannot hide the fact that demand has softened for a variety of reasons, and their order backlog is 70% smaller than it was prior to the Shanghai lockdown.”

Shanghai underwent lockdowns in late March 2022 as the government attempted to control a Covid outbreak.

Headwinds

Investors have grown concerned that Tesla would decide to cut prices to entice buyers, pressuring margins.

In October, Tesla slashed Model 3 and Model Y prices in China, going back on the prices it made earlier in 2022.

However, another hurdle Tesla faces in China is rising competition from domestic rivals, including Nio and Li Auto.

In addition, there are lower-priced competitors which will launch new models this year.

“Tesla’s models have been in the market for a while and are not as fresh to the Chinese consumer as other alternatives,” offered Russo.

“What we are learning is, EV product life cycles are short as they are shopped for their technology features.”

“Buying an older EV is like buying last year’s smartphone,” he continued.”

“They need new or refreshed models to reignite the market. Just pricing lower can damage their brand in the long run.”

Reference:

China risks loom over US tech giants Tesla and Apple as share prices plunge

Tag: Fourth quarter