Disney (DIS) reported in-line fiscal 2023 second-quarter results after the closing bell Wednesday, thanks to strength in its theme parks business. However, a miss on subscriber count and moving pieces related to management’s restructuring plan caused shares to sink more than 4% in after-hours trading. We still stand by CEO Bob Iger’s vision for the company. Revenue increased about 13% year-over-year to $21.82 billion, beating analysts’ expectations for $21.78 billion, according to the consensus estimate compiled by Refinitiv. Earnings-per-share (EPS) fell 14% on an annual basis to 93 cents, matching forecasts. Botton line We’ve been saying for weeks that fiscal Q2 was not the one to rush in and get in ahead of. Disney’s future earnings potential is still very promising thanks to the continued strength at the cash-generating theme parks and the upcoming profitability at streaming. But the company’s cost structure was too high coming into this year, and it will take time for management’s $5.5 billion savings plan to materialize. Furthermore, the direct-to-consumer (DTC) business is still several quarters away from reaching its highly awaited inflection point where it no longer drags down the operating results of the entire company and instead provides a positive contribution to earnings. Higher prices — even at the cost of some subscribers — and the advertising tier should help the business. Once Disney can prove that it can run a profitable streaming business at scale, the market will be more willing to ascribe a higher valuation to it. Until then, we look forward to seeing how the changes Iger and his team have in store play out. Disney lost its way for a few years, culminating back in November in the firing of Iger’s handpicked successor Bob Chapek and the return of Iger himself to the helm. However, the company is in the early days of becoming a more sustainably profitable company. Quarterly commentary Starting with the streaming business, we were…
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