Netflix (NASDAQ: NFLX) swooped in on Activision Blizzard s (NASDAQ: ATVI) former CFO Spencer Neumann just two days after he was fired
Activision Blizzard announced on Dec. 31 that Neumann was on paid leave and that it was letting him go. Hours later, rumors circulated that the firing was a result of his being poached by Netflix. On Jan. 2, Netflix officially announced that Neumann was its new CFO. He will replace Netflix's former CFO David Wells, who announced in August that he planned to step down from the company after 1[ads1]4 years.
Here's what we know about why Neumann was fired, his work history, and what he can do for Netflix in the new year
Why was Neumann fired?
Started working at Activision Blizzard less than two years ago. He was let on Monday "for cause unrelated to the company's financial reporting or disclosure controls and procedures," according to Dec. 31 filing with the Securities and Exchange Commission. Neumann is being replaced by Dennis Durkin, who had previously worked as Activision Blizzard's CFO from 2012 to 2017. While Activision Blizzard hasn't given a specific reason for letting Neumann go, and inside source duty CNBC that it's because he was pursuing another opportunity. Poaching top executives from other companies has become a common practice for Netflix, which seems to have its choice of employees thanks to its envied spot as the top player in the content space. In fact, Viacom and Twenty-First Century Fox have each sued Netflix over its aggressive hiring approach.
Neumann is leaving Activision Blizzard during a tough time for the company; The share of the shares was more than 26% in 2018. And Netflix's joining Netflix is a very important year for the streaming giant, as well as Walt Disney (NYSE: DIS) with its own video platform.
Where has Neumann worked?
Neumann has a solid work history at Activision Blizzard, Disney, and private equity firms Providence Equity Partners and Summit Partners. He graduated from Harvard University with both a bachelor's degree in economics and an MBA.
At Disney, Neumann held a number of senior positions that relate to the work he'll be doing at Netflix. He worked as executive vice president (EVP) of the ABC Television Network from 2001 to 2004, and as CFO of the Walt Disney Internet Group from 1999 to 2001. Most recently, he worked as CFO and EVP of Global Guest Experience at Disney's parks and resorts division from 2012 to May 2017, when he left to join Activision Blizzard for 18 months.
Of course, his extensive experience at Disney is interesting, considering it's due to launch its own video streaming platform this year. Netflix has been putting up a calm in front of the incoming competition. But behind the scenes, Netflix is likely to hate aggressive defensive campaigns on its 137 million subscribers.
What can you do when using Netflix?
At Netflix, Neumann will be focusing on the production financials behind the company quickly growing library of movies and TV shows. For this reason, Netflix specifically wanted its new CFO to be based in the production hub of Los Angeles, a source customs Reuters.
Neumann is leaving a struggling company for a company that's still peaking. While Blizzard's stock was suffering from last year, Netflix shares about 40%.
Last quarter, just added about 7 million new subscribers, while its revenue rose 34% to $ 4 trillion. The company is guiding for 9.4 million additions in its fourth-quarter report, due out on Jan. 17. In addition, the company expects revenue to rise by 27.8% for a record quarterly revenue of about $ 4.2 billion. However, to keep up its growth, Netflix needs to spend big bucks on content each year. Last year, Netflix estimated it would spend $ 8 billion on content and warned investors that it was going to increase its budget each year. The rate of cash burn has been a concern for investors, who wonder if this model is sustainable, as companies with more cash – like Disney and Apple – join the game.
As mentioned above , Netflix is known to launch its family-friendly video streaming platform in late 2019. In fact, Netflix also poached form ABC Entertainment president Channing Dungey in December to be its new VP or original content. Clearly, Netflix is not ignoring the threat of Disney.
Now that you know more about Neumann, it's clear why Netflix was eager to scoop up to 2019. He has extensive experience in the content game, is based in Los Angeles, and can help Netflix finalize its game plan to compete with Disney's new platform.
Natalie Walters has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Activision Blizzard, AAPL, Netflix, and Walt Disney. Motley Fool has the following options: long January 2020 $ 150 calls on AAPL and short January 2020 $ 155 calls on AAPL. The Motley Fool has a disclosure policy.