Eye of the Iger, Arm’s Blowout Quarter, Nearing S&P 5,000 2/8/24

David Faber (0:00)

Market Insight and Analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:06)

Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. We remain on S&P 5K Watch after climbing within one point yesterday.

Several solid reactions to earnings this morning from Arm, Disney, Ralph Lauren, Under Armour and Wynn. Our road map's gonna begin with Disney and that epic quarter. Quarterly beat, div hike, buyback plan, as well as guiding well ahead of expectations.

David Faber (0:29)

Plus we're on 5,000 watch. The S&P is nearing a new record milestone. That's less than three years after it crossed 4,000.

And an AI-fueled boom. Arm shares, they're up nearly 30% ahead of the open. And the company CEO, René Haas, he will be joining us this morning.

Jim Cramer (0:49)

Exclusively.

David Faber (0:49)

Exclusively.

Carl Quintanilla (0:51)

Let's start with Disney though in that jam-packed earnings report that did top analyst expectations, raising the dividend by 50%, announcing a ton of major deals in upcoming events, including this one and a half billion dollar stake in Epic Games, the maker of Fortnite. Bob Iger did talk about the company's streaming shifts with CNBC yesterday.

SPEAKER_4 (1:11)

All of these things are prepared for us to pivot as well. As the world changes, as the world is disrupted, and by the way, I'd rather be a disrupter than to be disrupted.

The linear business is still a business that serves us well in that it's profitable for us, and we intend to continue to be in it.

Carl Quintanilla (1:29)

Jim, the Needham upgrade today is titled The Magic's Back.

Jim Cramer (1:33)

Yeah, well, I think, look, the dividend increase is very good. Yes, absolutely, you have to like the, your album being on for you, you'll start getting that in March.

But David, okay, I'm gonna come to you immediately.

David Faber (1:46)

Please do.

Jim Cramer (1:47)

In the end, how much revenue growth for the company and how much of it was cost control?

David Faber (1:53)

Well, most, the reaction this morning is about cost control, more than revenue growth.

Jim Cramer (1:58)

Well, is that what you want? Do you want that out of, in a world of Meta and Amazon, in a world, what?

David Faber (2:04)

But they're not in that world, exactly. I mean, listen, he can talk positively about linear networks being obviously a provider of cash, but they're declining, we all know that.

And the fact is, when you compare Disney to some of its peers in that world, it's done a lot better. And yes, you have to cut costs. I think the key here is the $500 million that fell to the bottom line from the cuts in SG&A. You can see it right there.

And it's that $138 million loss in direct to consumer versus over a billion a year ago. That was well beyond what any analyst who followed the company anticipated in terms of savings there. They're talking about it getting to, they're talking about DGC, to your point about growth, they are talking about getting it to profitability by the fourth quarter of this calendar fiscal year, not to mention double digit margins. So, you know, for those who would look for growth, there's that possibility of it, certainly in a more significant way. But frankly, investors still were very much focused on getting margins up.

Jim Cramer (3:05)

Right, well, I think they were, and I'm gonna give you a little heresy here. There's someone who believes that this stock is selling on a multiple of promises.

David Faber (3:14)

Yes.

Jim Cramer (3:14)

Nelson Pelz.

David Faber (3:15)

Right.

Jim Cramer (3:16)

Now, I know the Wall Street Journal starts, Carl, the Wall Street Journal starts out by saying, well, these say they don't have to worry about Pelz. I think that they may be able to say that they don't have to worry about Pelz, but Pelz isn't going anywhere. If anything, Pelz feels that this was just, other than the buyback, other than the dividend, not even the buyback, but other than the dividend, not much here.

David Faber (3:36)

I mean, listen, as you know, I've known Nelson as you have for many, many years.

Great respect for what he's accomplished in various efforts he's made through the years in terms of activism and otherwise. But on this one, I don't know that he's getting much traction, Jim.

Jim Cramer (3:52)

You don't think that some of what, when Hugh Johnson talks about the sense of urgency may be related to Nelson Pelz, or is this just sense of urgency because they woke up in film work?