Disney Stock at 8 Year-Low

PamOKW

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Aug 18, 1999
Disney stock is taking a tumble today. :( Good news/bad news is that theme park attendance is still off about 10%. Maybe there will be more discounts to come. Hopefully, things will turn around soon at the parks but most especially at ABC.

Disney shares near 8-year low on warning

By Ben Berkowitz

LOS ANGELES, Aug 2 (Reuters) - Shares of Walt Disney Co. <DIS.N> fell sharply on Friday to their lowest levels in nearly eight years after it posted weak quarterly results from slack theme park attendance and warned of worse conditions ahead.

Disney's tumbling share price also sent stocks of travel and leisure companies downward in sympathy as much of the company's current weakness was tied to sluggish tourism at Disney's theme parks like Walt Disney World in Florida.

Debt rating agency Standard & Poor's weighed in, too, saying it may cut Disney's long-term corporate credit rating.

Following Disney's fiscal third quarter earnings report late Thursday, Chief Financial Officer Tom Staggs said theme park reservations were down about 10 percent in the current quarter, leading to lower-than-expected fourth quarter profits.

"The company's outlook was decidedly more negative than our expectations," Merrill Lynch analyst Jessica Reif Cohen said.

Disney shares were down 11 percent at $14.98 in early- afternoon trade on Nasdaq, a level it last reached in November 1994, on volume more than twice its 90-day average.

Burbank, Calif.-based media giant with interests in TV, film, music, radio and theme parks, reported a fiscal third quarter net profit of 18 cents a share, adjusted for accounting changes and operating income of 17 cents a share.

While the earnings came in line with forecasts, Wall Street focused on Disney's warning and low visibility for 2003.

In a conference call with analysts following the earnings report, Staggs declined to offer specific guidance for fiscal 2003, which begins Oct. 1, 2002.

"You are seeing an economy that is sending decidedly mixed signals. I see signs of underlying strength, but there are other leading indicators that are anything but strong," Staggs said, adding forecasting now was "pretty perilous."

Merrill's Reif Cohen slashed her fiscal year 2003 operating income estimate by $530 million to $3.3 billion and her fiscal 2003 earnings estimate by 25 percent, or 22 cents a share, to 65 cents a share from 87 cents a share.

"While some of the weakness in the September quarter may be attributed to concerns of more terrorist attacks around the anniversary of 9/11, we also believe that the trends reflect the softening of the U.S. economy," J.P. Morgan said in a research report.

The firm cut Disney's stock rating to a "long term buy" from "buy" rating.

Goldman Sachs reduced the stock to "market outperform" from "trading buy."

UBS Warburg maintained its "hold" rating but cut Disney's share price target to $18 from $27.

The slide in Disney shares also impact other leisure stocks, particularly in the hotel/casino space.

"We're all looking at Disney's numbers and particularly what they said about weakness in the current quarter and its got the investment community spooked about a decline in demand overall," Bear Stearns analyst Jason Ader said.

Stocks of casino companies MGM Mirage <MGG.N> and Mandalay Resort Group <MBG.N> and hotelier Marriott International Inc. <MAR.N> came under pressure.

On the New York Stock Exchange MGM stock was down $1.52, or 4.5 percent, to $32.61, while Mandalay shares were off $1.54, or 5.5 percent at $26.55.

Marriott shares fell $1.80, about 5.5 percent, to $31.30, and Hilton Hotels Corp. <HLT.N> lost 6 percent to $11.39.

Media shares fell, too. AOL Time Warner Inc. <AOL.N> was down 8 percent at $10.10, Viacom Inc. <VIA.N> was off 7.3 percent at $35.28 and Vivendi Universal <EAUG.PA> was down about 6 percent at $14.23.
 
That's too bad :( The market will rally, I'm sure, the only question is when.
 
The market is brutal right now and Disney is lowering its estimates. The fact that Disney is taking steps to improve its corporate governance such expensing stock options in the future and reducing the size of its board should be helpful.
 
:eek: well.. atlest i got the stock as a present when it was sorta low at the begining of July.... hopefuly it will go back up
 


I guess that is the reason for the great discounts this fall/winter. We sure love the discounts, but don't want them to come at the cost of cut-backs.
 

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