Sarangel
<font color=red><font color=navy>Rumor has it ...<
- Joined
- Jan 18, 2000
From Yahoo's Business section:
It's interesting that the theme parks (despite the oft discussed cutbacks) lost so much relative to their position last year. Could it be that the loss of revenue is *due* to all the cutbacks?
Sarangel
Walt Disney learned the hard way that pairing the critically acclaimed Sir Anthony Hopkins with the chronically crude Chris Rock in "Bad Company" was a bad idea. Investors who'd shunned one of the summer's biggest box-office flops punished Disney again on Friday, sending shares of the Dow component down 9% to a seven-year low of $15.31.
For its fiscal third quarter ended June 30, Disney posted net income of $364 million, or 18 cents a share, compared with $392 million, or 19 cents, in the year-ago quarter. Pro-forma earnings, which exclude one-time items, came to 17 cents a share compared with 29 cents last year, matching the Thomson Financial/First Call consensus estimate. Revenue dipped 3%, to $5.80 billion.
In addition to the "Bad Company" blunder, as well as other bombs in its movie business, the Burbank, Calif.-based media giant blamed its subpar performance on a drop-off in attendance at its typically reliable theme parks and falling ad revenues and ratings at its struggling ABC television network. Three out of the company's four operating units posted revenue declines, with the movie studio being the sole exception. But while studio revenue grew 3% to $1.4 billion as television-distribution sales offset lower ticket prices and international video revenue, Disney's inability to recoup the marketing and production costs for its summer stinkers sent studio operating income plunging 66% to $22 million.
Most dramatic was the 17% dive in the theme parks' operating income, to $467 million. The unit is customarily one of the company's most consistent sources of profit. Disney said fears of terrorism coupled with economic uncertainty curtailed international attendance at U.S. parks by 30% in the quarter, and would likely do so in the fiscal fourth quarter as well.
In one positive note for investors, Disney followed the lead of other major companies by saying it's in favor of expensing stock options. But until the accounting industry provides clear guidelines, Disney plans to include the effects of this shift in supplementary financial tables in its earnings statements.
Quote:
"At the moment, we view the shares as having fully discounted the rather bleak outlook," wrote Merrill Lynch analyst Jessica Reif Cohen in a research report on Friday. "In our opinion, the key swing factor for Disney's earnings and share price will be the trends within the theme-park segment. In our opinion, the risk-reward profile remains attractive and we would not encourage investors to sell shares based on this news." At press time, it couldn't be determined if Cohen owns shares of Disney; Merrill has an investment-banking relationship with the company.
It's interesting that the theme parks (despite the oft discussed cutbacks) lost so much relative to their position last year. Could it be that the loss of revenue is *due* to all the cutbacks?
Sarangel