The S&P 500 rebounded this week as some major technology companies reported positive earnings results and others revealed M&A news.
Walt Disney Co.'s shares jumped the week ended Aug. 7, even after the company reported a $2.9 billion income hit for its June quarter due to impacts from the coronavirus pandemic.
Disney's parks, experiences and products segment took the biggest blow, reporting revenues of $983 million for the fiscal third quarter, down 85% year over year. All of Disney's domestic parks and resorts, its cruise line business and Disneyland Paris were closed for the entirety of the just-ended period as social-distancing measures and shelter-in-place mandates took effect globally.
The company also said it plans to debut its live-action "Mulan" remake — originally scheduled to open in theaters this spring but postponed multiple times amid COVID-19 — as a premium-priced offering on its Disney+ streaming service.
"Mulan" will be available to Disney+ subscribers in most of its markets on Sept. 4. In the U.S., the film will cost Disney+ subscribers an additional $29.99, with retail pricing varying slightly in other markets.
Fitch Ratings Managing Director Patrice Cucinello called the "Mulan" announcement "somewhat of a surprise departure" from Disney's previously "unwavering support" of the theatrical exhibition model. Cucinello also predicted that the longer the effects of COVID-19 persist, the higher the risk of a "more permanent structural shift" for the business models of movie theaters.
Disney stock closed Aug. 6 trading up roughly 12% from its July 31 close, at $130.85 each.
Gaming company Take-Two Interactive Software Inc. also saw its shares jump after the company reported solid results in its fiscal first-quarter earnings.
Take-Two offered a full-year outlook of net revenue between $2.80 billion and $2.90 billion, driven by increased sales volume and player engagement amid the ongoing COVID-19 pandemic. Fiscal first-quarter revenue for the period ended June 30 was $831.3 million, up from $540.5 million in the prior-year period.
"I do think that people have come back to video games and tried video games when they hadn't tried them previously," Take-Two CEO Strauss Zelnick said on an earnings call.
The company's stock closed Aug. 6 trading up 8.12% for the week.
Meanwhile, Microsoft Corporation got a boost after it provided details about its plan to buy TikTok Inc. assets.
Microsoft said it intends to move forward with plans to acquire the U.S. operations of video-sharing app TikTok, with the goal of completing negotiations with its Chinese parent company Beijing Byte Dance Telecommunications Co. Ltd. by Sept. 15.
Even though Microsoft faces hurdles from several top lawmakers in Washington who have voiced national security concerns about the acquisition, analysts largely expect the deal to close successfully and are bullish on the tie-up.
For instance, Wedbush Securities analyst Daniel Ives predicted that there is at least a 75% chance the deal will secure approval given that Microsoft has remained largely out of the regulatory spotlight compared to other big tech companies.
Microsoft closed Aug. 6 trading up 5.53% from its July 31 close.
Microchip Technology Inc., however, fell after the microcontroller and circuits manufacturer lowered its outlook for the current quarter.
Microchip's net sales for the first quarter of fiscal year 2021 was $1.31 billion, down just 1% from the prior-year period, but the company's outlook was lowered because sales have fallen for four consecutive quarters.
CEO Steve Sanghi acknowledged business orders for the June quarter were "soft" compared to the March period, "as our customers and distributors did not have the visibility to place long-term orders."
The company closed Aug. 6 trading down 2.50% for the week.
