I presume you mean my perspective as to how I perceive Disney, specifically, and not how I see business in general!
And to answer that, it is yes and no. I will change my perspective if they report a profit and then don’t respond by then re-hiring back employees, etc.
Generating a profit in and off itself wouldn’t be enough, because Disney is also entering an unknown in all this. They are doing all they can to mitigate loss. But if they ultimately succeed in mitigating loss to the point of generating profit, I would expect them to go, “Hey…we did better than we hoped. We can ease up on some of the cuts we did now.”
If they generate a profit and DON’T do that, then I’ll become further disenfranchised with Disney’s management.
I do look at some of the other things they are doing as well. For example, they are cutting back heavily on construction projects. Those that are still customer facing they are finishing up, or those they are contractually obligated to continue, they are. But they are slowing or stopping work elsewhere. I think this is also about saving money, and ultimately, jobs (although, as I mentioned before, there is still a loss of construction jobs). I just mean if they save $500,000 in construction costs over here, it might mean they can keep on another 10 employees over there, etc. But, we shall see!
Agree. And this is just part of the ups and downs of any business. Thousands of companies would do the same thing. This is the free market system where you need to make a profit in order to grow and thrive. It is responsible to limit the debt. Quite a difference from say a government agency, where it doesn’t matter how much you are in the hole. For everyone to have faith in a company to treat all parties involved fairly, it is proven over decades, not the short term.
This is what I am thinking.
Staying in business for the long haul is their goal. They will need share holders and investors, etc. long term if they hope to bring any employees back.
And that is one of the problems with having shareholders. There are companies that get run into the ground because they focus on the short term for their shareholders rather than the long term health of the company.
I can totally get limiting debt / trying to maintain profitability. I don’t like to see so many people lose their jobs, but I do understand that businesses may need to enact layoffs to keep a company financially solvent. The dividends bit is where I start to question motives. Is this really about keeping Disney afloat? Or is it about corporate greed, i.e. maximize profits today at the cost of important but less immediately quantifiable properties like employee morale, employee loyalty, long term corporate health, etc.?
As long as the stock price tends to go up over time, investors will make money. Lots of businesses attract investors without offering dividends. Sure, dividends help, but they’re not a necessity to attract investors.
Maybe this is just because of my very limited understanding of dividends, but this does not make sense to me. I thought that companies tended to pay dividends when they were in a position of financial strength, when they had so much profit that they could afford to both run their business well and give shareholders an extra piece of the pie. In my mind you can’t be in such a robust financial position that you can pay dividends, and yet be so financially tenuous that you need to cut back and undermine the underlying quality of your product. In my mind, either (1) Disney isn’t doing so bad financially and they’re just using the pandemic as an excuse to reduce the quality of their product in order to get rid of expenses and increase profit, or (2) they really do need to cut expenses to be a responsible business, in which case they can’t afford to pay dividends.
Many large, proven, and trust worthy companies pay out dividends. That extra payout provides more certainty about a company’s well being.
Some investors put high importance into maintaining a stock portfolio with a yield. It is dependable monthly income, rather than undependable share price increases.
Some of us have expressed concerns since day one about the fallout of the lockdown on employment and the economy. At times, there has even been shade thrown at posters who express concern over the economy, as though we were willing to “kill grandma” for the economy’s sake.
Now that Disney is experiencing job losses though… the conversation has opened up?
I get that this is a Disney board but the problems of unemployment are not new.
It’s amazing that Disney could go this long WITHOUT layoffs.
Sure. But if Disney is doing so well, why are they having to cut back on guest experiences? Why have so many shops and restaurants completely closed? Why limit park hours? These presumably cost-saving measures have contributed to the apparent need for layoffs. Is Disney doing well, or isn’t it?
I can only speak for myself. I feel just as open to discussing restrictions and the economy now as I did before Disney’s layoffs.
My opinion hasn’t changed, either. I think that we need enough restrictions in place to keep this thing under control, and that we need to choose those restrictions wisely to minimize economic impact.
Remember Disney as a whole is doing well (steaming service). Having said that, each division should not rely on the next, financially. The parks guest experience cut back is a combined health safety and expense cut issue. But it can be hard to find a happy medium to please everyone.
None of the layoffs being announced now are really new. They were just furloughed before. Those furloughs are simply transitioning to full layoffs.
I say this to point out that while this all sounds like bad news…it isn’t really a change from what was announced a month ago, and not that much more than what was already the case anyhow.
I think what makes this news particularly striking is that I think it is solidifying the fact that this recovery from the virus isn’t going to happen any time soon, and as a result, Disney wasn’t able to put off the layoffs any longer.
This is very dependent upon the investor and their objectives. Stock price going up doesn’t mean the investor has actually made any money. They don’t make that money unless they sell the stock. And while it’s true that there are companies that don’t pay dividends and still attract investors, most dividend paying companies attract investors because of those dividends. If said company stops paying those dividends, those investors are going to sell. When that happens, the stock price falls and the company has even less capital to work with. Paying out dividends is necessary to the long term financial health of a company like Disney.
As an example - my father worked for UPS and our family is heavily invested in UPS stock. My mom watches for the dividend announcement like a hawk every quarter. She relies on that income. So much so, that even though the stock price has more than doubled in the past 6 months, she has sold off less than 10% of her holdings. She does not want to mess with her reliable dividend interest. (She also has every intention of repurchasing that stock if the price comes back down to a given level). Now, if UPS stopped paying a dividend, or even lowered it significantly, she would sell in a heartbeat. It is that dividend that keeps her money there.
ETA - And then there are the institutional investors that buy stocks in (very) large blocks. If a fund’s stated objective is to provide income, and one of the stocks stops paying income, they have a responsibility to their investors to dump that stock.
Let’s put blame where it really belongs. Not to say there’s not some actual person to point a finger at who could be doing a better job but the ultimate thing responsible for this crap is the pandemic.
As far as executive compensation goes, I think Disney is in such a tricky position. They MUST compensate their executives competitively or they will jump ship to go work somewhere else and Disney needs executive leadership to be able to survive this storm. Otherwise, Disney World closes. Let’s not sit here and pretend that that couldn’t happen. Disney, and the entertainment industry as a whole, is looking forward to the next year or two or three and seeing a bleak short-term future. We will likely have many things shudder. I hate it. I think no one could’ve really done anything better enough from the get-go to prevent it from happening eventually. I don’t know what margins look like for the industry as a whole but I bet none of them ever turn a profit when sales/revenue is limited to 25-30% of what it could be running a full show/park/theater/etc.
This isn’t the Black Death. But it took the world years and years to recover from it and the changes that occurred because of the plague reshaped life as they knew it. There was a before and an after. The same thing will be true with covid.
From what I gather there were big cuts planned even pre-Covid for this Fall, which is when their financial year starts and cuts are always made.
The sheer scale of the cuts has taken many people by surprise, leaving them stunned. And I’m talking about people who had contacts at quite a high level.
When things start gearing up again DIsney will have to re-hire. It remains to be seen how many former CMs are recalled and how many accept. Many will likely have moved on if they have been able to find something else.
For example, if the GF Orchestra have a successful run at their series of Christmas concerts that have been arranged, they may decide to continue under that name than return to WDW.
DIS’s last dividend payment was December 2019. Now obviously this is “suspends” and not cancelled and I’m not sure if they plan to pay out the December dividend upcoming - googling seems to show they haven’t announced things one way or the other for December of this year. But DIS has not made a dividend payout to shareholders since Covid started as of yet. They might in December, but they have not publicly announced they plan on resuming the dividend either…
Basically they didn’t pay the dividend to the shareholders in June so they retained the cash (~$1.6B I believe) which would help their cash flow. It’s not clear yet what they will do with the dividend in December.
This is cost avoidance, not putting profits in reserve. There are only 2 sides to the profit equation: revenue and cost. And businesses recalculate profit every fiscal quarter.
I am still baffled how Chapek even got tapped for the job. He is the most disliked person by Disney fandom. Since CFO Christine McCarthy, has been much more visible than Chapek, I’m wondering if picking him is not going well.
but the problems of unemployment are not new.