The Walt Disney Co. (NYSE:DIS) appeased investors by announcing a 7,000-workforce reduction plan and $5.5 billion in cost control initiatives, in the earnings call held yesterday. Disney beat analysts’ expectations on both the top and bottom lines for its Q4FY22 results published on February 8, aftermarket. Following the news, DIS shares are trending up 6.4% in pre-market trading at the time of this writing.
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Most of the layoffs will come from the Disney Media and Entertainment Distribution (DMED) department, the company said. Meanwhile, $3 billion of cost-cutting would come from non-sports content spending and $2.5 billion from other operating expenses.
As per a WSJ report, the company is also reorganizing the segments to combine its movie and television studios, its linear television networks, and its flagship streaming video services under a new division known as “Disney Entertainment”. The remaining businesses will be realigned under the existing “Disney Parks, Experiences and Products” division, while “ESPN” will include Disney’s international sports TV networks.
CEO Robert Iger also announced a slew of changes to Disney’s shows and movies, the possibility of bringing back dividends, as well as repricing its video streaming services. All these efforts are aimed at rebooting creativity, cutting costs, and enhancing the bottom line, particularly in the streaming segment.
Is DIS Stock a Buy, Sell, or Hold?
On TipRanks, DIS stock has a Strong Buy consensus rating based on 13 Buys and three Hold ratings. Also, the average Disney price forecast of $121 implies 8.3% upside potential from current levels. Meanwhile, the stock has gained 25.6% so far this year.
