Spencer Neumann, who had served as CFO at Activision since May 2017, was placed on leave on Monday, Dec. 31 and ultimately terminated from the gaming group. Within days, Netflix announced that it had hired Neumann as CFO. Neumann will start at Netflix later this month, according to the company.
In a press release, Activision wrote that Neumann was "terminated for cause for violating his legal obligations to the Company." In a regulatory filing, Activision said the firing was unrelated to the company's financial reporting and controls; it was unclear if the move was related to Neumann's negotiations with Netflix. Reuters initially reported on the hiring on Tuesday night.
On Wednesday, Netflix shares initially fell following a downgrade from SunTrust Robinson Humphrey, which lowered its price target for Netflix by 13%, to $355 from $410. The SunTrust analysts lowered their projections for new subscriber additions for the fourth quarter, estimating 8.65 million new subscribers compared with Netflix's estimate of 9.4 million, and noted rising competition this year from the likes of Disney (DIS) , Apple (AAPL) and others.
By early afternoon, Netflix shares had recovered and were roughly flat at $267.56.
From a financial point of view, one of Neumann's tasks will be to properly manage Netflix's debt burden, according to Wedbush's Michael Pachter.
"The challenge for him will be managing the balance sheet, with a ballooning content library that has spurious value and a ballooning debt burden," Pachter said. "I think they're going to hit a debt ceiling in the next few years, and he is going to have a challenge in balancing the company's capital requirements with its financing capability."
Neumann previously worked in private equity and held various executive roles at Disney to joining Activision, serving at one point as CFO and EVP of Global Guest Experience at Walt Disney Parks and Resorts.
Netflix's previous CFO, David Wells, announced his departure in August 2018 after 14 years at the company.
To replace Neumann as CFO, Activision named Dennis Durkin, who had previously been the company's CFO from 2012 to 2017 and most recently served as its Chief Corporate Officer.
In a statement, Activision CEO Bobby Kotick described Durkin as "a seasoned leader known for driving financial and operational excellence. We missed having him in a more day-to-day operational and financial role and are glad to have him back as CFO," he said.
Activision shares were up 1.4% to 267.56 on Wednesday.