Week's Winners and Losers: Netflix Makes a Deal, McDonald's Gets Winged
Comcast (CMCSK), Netflix (NFLX), and You -- Winners (Mostly)
The week kicked off with Netflix shelling out some dough to be able to stream its content faster for Comcast's Xfinity broadband subscribers. It's a move that's long overdue, as Netflix's monthly reports on different access providers showed that Xfinity speeds on Netflix video streams were starting to decline in recent months. This is the kind of stuff that would result in consumers either ditching Comcast or unsubscribing from Netflix so this "peering" arrangement benefits both companies.
Naturally it's also good news for Comcast subscribers. No one likes to see online videos stop to buffer or degrade in image quality. Everybody wins -- mostly.
(The down side, though, can be viewed like this: Netflix, the 800 lb. gorilla of streaming video, just caved on the net neutrality fight and agreed to pay for bandwidth. It'll have to pass that cost on to subscribers eventually. And with Netflix out of the fight, expect any smaller company that sees its content being throttled to pay the Danegeld quickly, too.)
The Japanese consumer electronics giant has been struggling on several fronts lately, and now it's retreating on the retail front, too. Sony revealed plans to close 20 of its 31 Sony Store locations in this country. The outcome probably won't come as a surprise to anyone that has walked by one of its locations. However, Sony's been scaling back through layoffs, selling off its Vaio computer business, and other acts of surrender. Keeping the Sony Store locations would just be a public admission that it's not as cool as Apple (AAPL) with its namesake stores.
"While these moves were extremely tough, they were absolutely necessary to position us in the best possible place for future growth," Sony Electronics chief Mike Fasulo notes in a press release explaining the move. It's true that sometimes you need to take a step back to take two forward, but there's little reason to believe that this is what will happen this time.
It's going to cost theme park fans a little more to visit Disney World now. The family entertainment giant kicked off the week by raising ticket prices to its gated Florida attractions by $4, making it a stiff $99 cover charge to get into the flagship Magic Kingdom.
Naturally the Internet is buzzing with negative opinions, but that's not new. Disney raises its single-day ticket prices every year, yet attendance keeps setting new records. The hikes had taken place in early June during the three previous years, but Disney moved the increase up several months this time around. That's bad news for springtime visitors who only planned to spend a single day at the park -- there are still a variety of multiday pass discounts -- but it's good news for Disney shareholders.
Folks will likely keep coming since the difference between $95 last week and $99 now isn't likely make or break a vacation plan.
So much for using chicken wings as a catalyst to drum up sales: McDonald's is discounting its Mighty Wings, but there's more to this markdown than meets the eye. The Wall Street Journal is reporting that weak sales have left the world's largest restaurant chain with 10 million pounds of unsold Mighty Wings. In a desperate move, McDonald's is effectively slashing the per-piece price by 40 percent in offering five pieces for $3 in a new promotion.
McDonald's is pitching this as a "limited time" offer, but in this case, the limited time is probably "however long it takes to sell 5,000 tons of wings."
You never get a second chance to make a first impression on Wall Street, and zulily made the most of its opportunity. The online retailer posted blowout results in its first quarter as a public company with sales doubling to $257 million. Earnings of 10 cents a share blew away the 4 cents a share that analysts were targeting.
The market's noticing. Shares of zulily have climbed in each of the first four trading days of the week, soaring a whopping 79 percent along the way.
Motley Fool contributor Rick Munarriz owns shares of Netflix and Walt Disney. The Motley Fool recommends Apple, McDonald's, Netflix and Walt Disney. The Motley Fool owns shares of Apple, McDonald's, Netflix and Walt Disney.