Stock index futures were slightly higher in premarket trading on Thursday morning, with investors appearing pleased with the latest readings on inflation at the consumer level. Overall, market participants seem bullish, with major benchmarks moving to their best levels of the year as of yesterday's close.
Walt Disney (DIS -1.95%) and Taiwan Semiconductor Manufacturing (TSM 0.72%) were in the news overnight, and both companies saw their shares move higher in early Thursday in response. Disney appears to be facing a potential leadership battle over the future direction of the entertainment and media giant, while Taiwan Semi released quarterly results that shed light on the current state of the semiconductor market.
Disney gets a challenge
Shares of Disney were up 2% in premarket trading Thursday. The House of Mouse named a new chair of its board of directors, but that choice wasn't sufficient to deter activist investors from nominating one of their own to join Disney's governing body.
Disney said late Wednesday that it had selected Mark Parker to be Disney's board chair. Parker has served on Disney's board since 2016 and also acts as executive chair of the board of directors at athletic footwear pioneer Nike. Current board chair Susan Arnold hit the 15-year term limit and will not be eligible to continue beyond the annual shareholder meeting.
Yet the biggest news came from Trian Fund Management. The asset management company nominated founder Nelson Peltz to join the Disney board as a director, citing numerous problems at Disney including failures in planning for its leadership succession, ongoing losses in the streaming video business, and poor discipline in strategic acquisitions.
Peltz has a history of bringing about change at major consumer-facing companies, and many investors like the idea of an outside influencer reining in newly appointed CEO Bob Iger in light of big declines in Disney stock recently. Others fear that the proxy battle will prove to be a distraction as the company tries to overcome business challenges in a tough economic environment.
Taiwan Semi rises but sees potential trouble ahead
Meanwhile, shares of Taiwan Semiconductor Manufacturing were up more than 3% before the market opened on Thursday morning. The global semiconductor foundry reported strong results for the fourth quarter of 2022, but it also kept a conservative view of how 2023 might play out.
Taiwan Semi's fourth-quarter numbers were strong. Revenue of $19.93 billion was up 27% year over year, while net income jumped 78% from year-ago levels. Gross margin soared by 9.5 percentage points to 62.2%, as shipments of cutting-edge 5-nanometer and 7-nanometer semiconductor chips represented more than half of its total sales.
Yet Taiwan Semi seemed to emphasize the fact that its quarterly results represented a slight slowdown from its third-quarter performance. When measured in U.S. dollars, revenue was down 1.5% from the quarter ended in September, while net income inched higher. CFO Wendell Huang pointed to weaker demand in its end markets as well as inventory adjustments by its foundry customers for the slowdown.
Looking ahead, Taiwan Semi sees weak macroeconomic conditions continuing to weigh on demand, projecting revenue to decline to between $16.7 billion and $17.5 billion in the first quarter of 2023. Yet in the long run, the semiconductor foundry giant expects its margins to remain solid, and the need for its customers to keep up with advances in technology should help Taiwan Semi keep its leadership role in the chip industry.
