Thanks to cost cutting, Disney said profit this year will rise at least 20% to about $4.60 a share, topping estimates of $4.27. That could help Chief Executive Officer Bob Iger fend off activist investor Trian Fund Management LP, which has nominated its founder Nelson Peltz and former Disney finance chief Jay Rasulo to the entertainment giant’s board.
In a nod to investors, Burbank, California-based Disney raised its dividend by 50% to 45 cents a share and approved a $3 billion stock repurchase program for the year.
Shares of Disney gained as much as 6.4% in premarket trading before New York exchanges opened on Thursday, which would be the biggest intraday gain since November if it holds at the open. The company also announced it’s acquiring a $1.5 billion stake in Epic Games Inc. as part of a collaboration with the company that makes the popular Fortnite title.
Subscribers to the Disney+ streaming service fell to 149.6 million in the quarter, missing analysts’ projections of 151.2 million, while overall losses in streaming, including Hulu and ESPN+, shrank to $216 million from $1.05 billion a year ago.
However, the company expects to add as many as 6 million core Disney+ subscribers this period and continues to predict its streaming operation will reach profitability by the fourth quarter of the current fiscal year.