December 19, 2023
As they say, proof is in the pudding. So, this morning, I jotted down the first several questions that came to mind, wondering if the information that AI platforms provided would be helpful. It took five minutes to conceive and enter the questions and no more than two minutes to collect all the answers plus citations, which I removed from the content below.
I judge that Copilot is an impressive productivity tool. But I’ll let you decide after reviewing my questions and the answers provided by Copilot.
Q. How will Disney’s fights with DeSantis and Musk impact Disney’s earnings?
The disputes between Disney and Florida Governor Ron DeSantis, as well as with Elon Musk and Tesla, have been quite public and have garnered significant attention.
Disney vs. DeSantis: The conflict between Disney and Governor DeSantis began over a year ago when Disney spoke out against a controversial state law limiting discussions of sexual orientation and gender expression in Florida schools. In response, DeSantis stripped Disney World of its special tax district status. The legal fights between Disney and DeSantis have escalated. Disney filed a First Amendment lawsuit against DeSantis, claiming the governor violated its free speech rights by punishing it for expressing opposition to the law.
Disney vs. Musk: The conflict with Elon Musk began when Disney pulled advertising from X, a social media platform owned by Musk. Musk responded strongly, criticizing Disney and its CEO, Bob Iger. The dispute has led to some people canceling their Disney+ subscriptions.
As for Disney’s earnings, the latest reports suggest that Disney’s earnings have been better than expected. For instance, in Q4 2023, Disney reported earnings per share (EPS) of $0.82, beating the consensus estimate of $0.676. However, it’s important to note that these disputes could potentially impact Disney’s future earnings and reputation, depending on how they unfold and are resolved.
It’s also worth noting that earnings forecasts for Disney suggest growth. For instance, earnings for Disney are expected to grow by 29.45% in the coming year, from $4.38 to $5.67 per share. However, these are just forecasts, and results can vary based on many factors.
In conclusion, while these disputes are serious and potentially impact Disney’s reputation and customer relations, the company’s financial performance appears strong. However, the future impact of these disputes on Disney’s earnings is uncertain. It will depend on various factors, including resolving these disputes and the company’s ability to navigate these challenges.
Q. How serious is the rising cost of food at McDonald’s for an average American family? Is that issue affecting McDonald’s revenue and earnings?
The rising food cost at McDonald’s impacts the average American family, especially those with lower incomes. In the third quarter of 2022, McDonald’s US prices were up about 10% year-over-year on average. This price increase has led to some less affluent customers shifting from buying meals to purchasing value items. Some might also trade down to McDonald’s from more expensive chains or restaurants.
As for the impact on McDonald’s revenue and earnings, McDonald’s has seen an increase in its revenue despite the price increases. In the third quarter of 2023, McDonald’s reported $6.69 billion in revenue. Even though there was a drop in business from low-income customers, the higher prices translated into pricier orders, with McDonald’s same-store sales up 8.1%. However, it’s important to note that higher costs for food and labor weighed on profits, and the company expects that pressure to continue.
In conclusion, while the rising cost of food at McDonald’s is a concern for the average American family, especially those with lower incomes, it has not negatively impacted McDonald’s revenue and earnings in the short term. However, the long-term impact will depend on various factors, including managing these price increases and changing customers’ behaviors.
Q. How can Apple sell iPhones to people in low-income regions of the world when well-to-do Americans complain about the high price?
Apple has a few strategies to make iPhones more accessible to people in low-income regions:
Partnerships with Telecom Providers: Apple has partnered with telecom service providers in various developed and developing nations to sell iPhones on an EMI basis with 2-3 years of unlimited calling/data usage1. This allows lower-income people to afford an iPhone by spreading the cost over a longer period.
Lower-Cost Models: Apple has introduced lower-cost models like the iPhone SE to cater to a wider range of consumers. These models offer many of the same features as the higher-end models but at a more affordable price point.
Indirect Distribution Channels: Most of Apple’s sales (62% in 2022) came from indirect channels, which include third-party cellular networks, wholesalers/retailers, and resellers. These channels can help amplify sales and enable many people to purchase the iPhone.
Used and Refurbished iPhones: Apple also sells certified refurbished iPhones at a lower price. These are used iPhones that have been inspected, tested, and restored to full working condition.
While these strategies can help make iPhones more accessible to people in low-income regions, it’s important to note that the cost of an iPhone is still relatively high compared to other smartphone brands. Therefore, affordability may still challenge many people in these regions.
Q. What percent of Boeing’s revenue and earnings is military-related, and is that part of the company thriving?
Boeing’s revenue and earnings come from various segments, not just from airplanes. In 2022, the revenues of the Boeing Company in the defense, space & security segment amounted to $23.16 billion. This segment includes military aircraft, weapons systems, strategic defense and intelligence systems, and satellite systems. The US Department of Defense is the top customer in this segment.
As for the performance of the military-related part of the company, it has faced some challenges. In the third quarter of 2022, Boeing’s defense business reported $2.8 billion in losses. The company attributed these losses to problems with several key programs, including the KC-46A Pegasus program and the VC-25B Air Force One. Boeing pointed to higher manufacturing and supply chain costs and technical challenges.
However, it’s important to note that the company has addressed these issues. For instance, Boeing has reorganized its defense, space, and security business from eight divisions into four, focusing on vertical lift, mobility, surveillance, bombers, air dominance, and space, intelligence, and weapons systems. This reorganization is aimed at improving operational discipline and program quality and performance.
Regarding the percentage of Boeing’s total revenue from non-airplane sources, the exact figure can vary from year to year and is not readily available. However, a significant portion of Boeing’s revenue comes from its defense, space & security segment.
Q. How much will Microsoft’s acquisition of Activision Blizzard affect Microsoft’s revenues and earnings?
Microsoft’s acquisition of Activision Blizzard for $68.7 billion is expected to impact Microsoft’s revenues and earnings significantly.
Revenue Growth: The acquisition is expected to boost Microsoft’s gaming revenues. After the transaction closes, Microsoft will become the world’s third-largest gaming company by revenue, behind Tencent and Sony.
Content Acquisition: Activision Blizzard is a content powerhouse responsible for some of the biggest blockbusters in the industry. The acquisition will give Microsoft the rights to all games and IP Activision Blizzard previously released4. This could generate significant engagement and revenue for Microsoft’s move into cloud gaming.
Increased Market Share: With this acquisition, Microsoft will own all the developers under the Activision Blizzard company. This includes teams at Activision Publishing, Blizzard Entertainment, and King, the developer behind the wildly popular mobile series Candy Crush. This could potentially increase Microsoft’s market share in the gaming industry.
However, it’s important to note that the deal could face regulatory bottlenecks and recent problems at Activision Blizzard1. Investors have adopted a wait-and-watch attitude considering these potential challenges1. Therefore, while the acquisition is expected to impact Microsoft’s revenues and earnings significantly, the exact impact will depend on various factors, including how these challenges are managed and resolved.
Follow-up Q. Wasn’t Microsoft’s acquisition of Activision Blizzard approved by regulators worldwide?
The deal was put through a hefty regulatory review and gained a favorable ruling from a US district judge. The UK’s Competition and Markets Authority also approved the deal. However, it’s worth noting that the US Federal Trade Commission (FTC) is continuing its efforts to challenge Microsoft’s acquisition of Activision Blizzard, even after the deal’s closure and approval by British regulators. Despite this, Microsoft has closed its $69 billion acquisition.
Q. Are GenZ using credit cards like older people, or are they using cryptocurrency more?
According to a study by TransUnion, 50% of Gen Z in the US have a credit card1. They have an average of 1.5 credit cards, which is lower than the average American’s four credit cards. The median credit card balance is $606, and cardholders have roughly a 31% utilization rate.
As for cryptocurrency, fewer than 11% of Gen Z respondents to a survey of 2,334 US consumers even have a crypto wallet or exchange account. However, Gen Z and Millennials make up nearly 94% of all crypto buyers.
So, while Gen Z actively uses credit cards, their engagement with cryptocurrency is still relatively low compared to older generations. However, it’s worth noting that cryptocurrency usage among younger generations is growing.
Q. The Dow Jones index components frequently change. What companies in the DJIA index will most likely be changed and why?
The Dow Jones Industrial Average (DJIA) components change over time, reflecting economic and market shifts. However, these changes are not frequent. Since its inception in 1896, the DJIA has undergone more than 50 changes. S&P Dow Jones Indices decide to replace a company in the DJIA, typically based on various factors, including the company’s reputation, growth, interest to investors, and sector representation.
Predicting which companies are most likely to be changed in the DJIA is challenging and speculative, as it depends on many factors that can change over time. These factors include the company’s market capitalization, stock price, sector representation, and financial health.
It’s also important to note that changes to the DJIA can impact the index and the individual stocks being added or dropped. Therefore, investors should stay informed about potential changes to the DJIA and understand how they might affect their investments.
Conclusion:
That I could retrieve all this computer-generated information in two minutes is truly shocking. So, I asked Copilot how it might impact various activities of mine in the future, and this is Copilot’s reply:
A. The advent of AI tools like Copilot can indeed have a significant impact on various fields. Here’s how: