Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

After Hours: CBS and Viacom Apparently Set a Date, OrganiGram Nixes Experiment

By Eric Volkman - Jul 15, 2019 at 8:50PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The looming merger in big entertainment seemingly has a deadline, and a big reason for a marijuana stock's quarterly loss is revealed.

The latest earnings season has kicked off, with Citigroup being the first major company to unveil its figures. Since this occurred in the morning, we won't get into Citigroup's results here. Suffice it to say that in the coming days, quarterly results will be closely tracked by investors, and should impact the relevant stocks and sectors accordingly.

Outside of a spot of earnings-related news trickling in after hours, we're also hearing about developments in a long-germinating merger. Here's the skinny on the post-closing market scene.

The outside of the CBS building with the CBS logo.

Image source: CBS.

CBS and Viacom: In a hurry to marry?

According to a report published by CNBC after market close, broadcasters CBS ( VIAC 1.27% ) and Viacom (NASDAQ: VIA)( VIAB ) have set a deadline to agree on a deal to merge. The report, citing "people familiar with the matter," states that Aug. 8 is the line in the sand for the two companies.

That date has not been chosen at random: Both CBS and Viacom are scheduled to report their Q2 earnings then.

The two companies have a long history together. Viacom was a unit of CBS, then was spun off. It returned in a 1999 merger, then a new form of CBS was, in turn, spun off from Viacom in 2006. Over the past few months, speculation has been rife that the two are engaged in serious discussions to combine.

If the article is accurate, the imposition of a deadline gives plenty of impetus for a merger. There isn't much time to waste -- big rivals like AT&T and Walt Disney have recently introduced very compelling streaming services of their own. Such services are the present and future of the entertainment industry; it'll be hard for any major company in this space to be competitive without a good one stuffed with content.

Neither CBS nor Viacom has yet commented on the CNBC report.

CBS shares are trading slightly lower tonight on the news, as is Viacom's B stock. The latter company's A stock is up marginally.

OrganiGram's innovation flops, Q3 results affected

Marijuana stock OrganiGram Holdings ( OGI 2.75% ) is trading a bit lower in the evening hours. Perhaps this has something to do with an interview the company's CEO, Greg Engel, gave MarketWatch that was published after market close.

In the interview, Engel elaborated on the company's attempts to grow marijuana using a new technique that affected Q3 results (released this morning). Engel said that OrganiGram tried to clone plants by using a flower in early bloom from an existing plant. Apparently, initial attempts at this were promising, but were inconsistent when used in a broader group of plants.

The process took several weeks, as did a subsequent reversion to more traditional means of cloning. This back-and-forth cost the company almost 50% more in cash during the quarter, said Engel, and in turn affected earnings.

Regardless, OrganiGram still did relatively well. For the quarter, gross revenue came in at 30.4 million Canadian dollars ($23.3 million), a nearly tenfold increase from the Q3 2018 figure. On the bottom line, the company lost CA$10.2 million ($7.8 million), or CA$0.07 ($0.05). In the year-ago quarter, its profit was CA$2.8 million ($2.1 million).

That revenue figure was higher than the consensus analyst estimate of CA$29.7 million ($22.8 million), but the expectation for per-share earnings was a profit of CA$0.03 ($0.02) per share.

Although the stock gained nearly 5% during standard-hours trading, it's down almost 2% in post-market action. Investors shouldn't be discouraged, though -- most marijuana stocks are still early stage, and costs are generally outpacing sales. Big revenue gains like the one OrganiGram posted today indicate that some are taking advantage of a rapidly increasing opportunity in the still-nascent marijuana market.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ViacomCBS Inc. Stock Quote
ViacomCBS Inc.
VIAC
$31.78 (1.27%) $0.40
Viacom, Inc. Stock Quote
Viacom, Inc.
VIAB
OrganiGram Holdings Stock Quote
OrganiGram Holdings
OGI
$2.06 (2.75%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
652%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/08/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.