Ya Hooo, DIS breaks $20.00

[KNWVIKING]

DIS closed at $20.07 today, first time in how long has it been above $20.00 ? Any guesses where it will be by years end ? I think $24-25.00 is realistic.

 

[Golter]

24 - 25 would be awesome, but that wont please most on this board...30 - 40% wont be enough, most expect 50-75%.

 

[blackshirt]

With the company in the shape it appears to be in, I tried to short 400 shares this morning.(Was'nt successful, brokerage didn't have them and I didn't like the margin requirements enough to use the telephone) I believe the price will hit 12 before it ever rises to 25. The company's PE is 40, typical of a growth company which Disney certainly has not been since the early 90's. Where will the growth in profits come from? DCA? AK? Unless ABC and the cable channels other than ESPN produce, there won't be any change in profits. Nemo will help , but thats a drop in the bucket. The parks are being milked, plain and simple, and they produce the lions share of the profits. Attendence is falling, guests are booking less far out, guests are spending less per visit. Hmmm, I don't think profits will rise at the pace the PE suggests. IMHO, if you can get out now with a gain, or can use a loss to offset other capital gains, now might be a good time to think this over. JMHO

 

[Golter]

$12.00 that's a joke....the main reason theme parks have been down.... "Its the economy, stupid" (Quoting Clinton, I'm not calling anyone Stupid). We are going on three years of economic slowdown, when times are tough people take fewer vacations. When the future is uncertain people are not going to book 6 months in advance. 9/11 hurt the airline industry, which in turns hurts Disney. They are weathering the storm fairly well. This Summer will be huge for the theme parks. I live on a street with just 12 homes on it, 4 families are there now or are leaving by friday. Nemo is a hit, all indications are that Pirates will do well, economy turnaround will spur advertising dollar which will help ABC and ESPN. P/E ratios are overrated. The overall outlook for DIS is bright. Most of wallstreet agrees majority have it rated a BUY or STRONG BUY. The only way it will hit 12 is if it splits.

 

[Snowgod]

We live in the Walmart economy. Discounters sell more and make more as a result. What has Disney done, raised prices and cut back on services. How will they make more money by doing that? They have started to discount and brought in more crowds as a result but they just raised ticket prices and that will hurt them in the long run. The best customers Disney has such as the DVC members and the repeat visitors should be their target with discounts and then these people will return to the parks again. Anyone who makes one or more trips a year to WDW should be catered to the way casinos cater to big gamblers with lots of perks.

If they cut weekday ticket prices to $40 they would have to turn people away.

 

[KNWVIKING]

Do you think the $2.00 price hike is really going to stop people from going to WDW ? It didn't stop IOA/US/SW guests when they raised theirs six months ago.

As for DVC members: There are approx 75-80,000 of us. Triple that to account for kids.Then round it off to an even 1/4 mil. What did WDW's four theme parks pull in last year ? 30+ million guests ? DVC is still a small number to Disney.

The way I see it,DIS is at $20.00 when things suck and are now starting to improve. How can the price not go up ?

 

[Golter]

The ticket price increase, if you can call it that, is just a ploy to discourage you from waiting till you get here to buy your passes. It will reduce expenses and increase profits. The day is coming were you will pay a large premium to buy tickets at gate. US/IOA now have kiosk that can print your tickets from which were purchase over the internet for a discount.

When the economy stalls, you have to cut expenses. If the MK is open till midnight everynight but the crowds dont justify the enormous expense of staying open later you dont do it. Sometimes you just have to punt, and I can honestly say that my visit in Sept 2000 and the one in Oct 2002 were no different. I didn't notice any change. My kids had a great time and so did I. WDW is still a great value compared to other forms of entertainment. (Ball Games, tickets $30-$40, $8.00 for a beer. 3 hours of entertainment if your team wins. Movie Theaters, Ticket price 8.50, large coke and popcorn another $8.00 2 hours of entertainment if the movie is good. Ballet , Concert or Play is going to cost you $70 - $100 just to get in the door.)

 

[blackshirt]

Originally posted by Golter
The ticket price increase, if you can call it that, is just a ploy to discourage you from waiting till you get here to buy your passes. It will reduce expenses and increase profits. The day is coming were you will pay a large premium to buy tickets at gate. US/IOA now have kiosk that can print your tickets from which were purchase over the internet for a discount.

I agree that a $2 ticket increase will effect few vacationers. Rationing of basic park amenities will have a much greater effect, especially after this summer. Please explain HOW a ticket increase even as insignificant as $2 can "reduce expenses". As someone who is a student of accounting, I am always eager to learn how to slash costs. I agree this summer will probably be strong, but hell might be preferable to a July at the MK closing at maybe 8PM most nights and parades and fireworks a few times a week. How many of those "guests" shall be returning? So disney will see several pennies profit extra per share. AT WHAT COST TO THE FUTURE??????
Golter, as to your initial post, Did you have to pull out management's letter to the shareholders to get all those "talking points" in? Eisner would be proud. Careful reading of other posts( by many others more eloquent than I) thoughout the Rumors and News Board will alert you to the disagreements that exist in our way of seeing things.(Which is fine, every customer is entitled to vote with their $) Anyway, I hope I am wrong about the stock price as I know that many here have lost a great deal of money from the recent so-called "management" that Eisner has provided. As I don't own or owe any Disney stock, I wish it good luck in the future. I am pessimistic, however, about its prospects. Until present management changes the way it does business, I see a general malaise or downtrend in the stock.
PS The present great deals available at WDW, coming at such a late date, strike me as a PANIC REACTION to extremely low reservation rates. If everything is fine and dandy with the economy picking up( Which I believe it has) WHY must Disney resort to such tactics? For the customer's benefit? HAHAHAHAHA No, because of desperation. In the last 9 months I think that Eisner promised results within a year. Hmmm

 

[Snowgod]

If a DVC member spends 7 days in the parks (I spent over 20) times 75000 members plus kids and family and friends, it adds up pretty fast. I am not an accountant but I consider that a large market share.

 

[EUROPA]

I agree this summer will probably be strong,

The strange thing is that Disney is not predicting a "strong" summer. I hope you guys aren't putting all you hopes into two movies and a failing 4th place network to drive Disney's money maker(the parks).

 

[Snowgod]

No, but the Mighty Ducks may actually be worth something.

 

[blackshirt]

Originally posted by Snowgod
No, but the Mighty Ducks may actually be wotrh something.

Sorry, but the ducks, championship or not, are worth what somebody is willing to pay. Capitailism you know.
Now, if some clown wants to showcase himself as Eisner is apparrently doing, then they might be worth more than what Disney bought them for. Perhaps Eisner could trade all of his stock given to him by the shareholders of Disney,over the years,(roughly a billion $){What was beastly kingdom to cost} for his excellent management skills that he has exibited over the years, for the Mighty Ducks. Of course, he should keep all the shares for which he actually paid for himself. Those shares can can be easily accounted for as they were purchased in the last 3 months. This from Disney's THIRD highest stockholder. God help the future.

 

[Golter]

How does raising prices at the gate reduce expenses and increase profits??? Its simple business, when you give incentive (Lower Prices) to buy early, you will have cash in hand sooner. (Cash Flow) Less people waiting to purchase at gate (because they are discouraged by higher prices) fewer CM's to sit in booth and take your money. Whaaala!! Lower expenses and higher profits.

 

[EUROPA]

Using that business model....Disney should be out of debt right around the time the sun burns out.

 

[DisFan2]

Good thing the broker didn't have the shares to short:

http://biz.yahoo.com/djus/030604/0946000832_3.html

 

[Golter]

This guy is not the only one that has DIS's outlook bright.

Europa:

That's not a business model, it part of a larger picture. I have a business degree and own my own business, so I'm speaking from expierence. Sometimes you have to make tough decisions and see past the next fiscal quarter. It's all so easy for the armchair CEO to monday morning quarterback....its another story compared to actually running a huge corp like DIS.

 

[EUROPA]

Originally posted by Golter
This guy is not the only one that has DIS's outlook bright.

Europa:

That's not a business model, it part of a larger picture. I have a business degree and own my own business, so I'm speaking from expierence. Sometimes you have to make tough decisions and see past the next fiscal quarter. It's all so easy for the armchair CEO to monday morning quarterback....its another story compared to actually running a huge corp like DIS.

I have a degree in computer science and a business minor (so what?)

I'm a consumer ...so I'm speaking from experience... pissing off the customer in search of short term profits will kill a company. It's never been a good business model and it never will be. Eisner is well paid for his "efforts" as CEO. Nobody asked him to go out and take over the world. He tried that out of his own greed. If he can't run a huge company the size of Disney then he should not be doing it. If you care to remember Disney's problems started before the downturn in the economy.

 

[blackshirt]

Sorry, but I guess I'm too dense too understand how this "cuts expenses" I guess Disney could run their ticket selling process at the parks like an attraction with only one window open per day for say 4 hours. This would be an incentive to purchase your tickets early and would certainly save wage expense. And as a bonus, the "guest" would get more and more excited as they approached the front of the "attraction" window. At the attraction window they could be lectured by a CM about the importance of buying their passes months if not decades in advance in order to "save" money.

 

[KNWVIKING]

Virtually every theme park in Orlando sells passes on-line.Airlines do it,movie theaters do it, everybody does it. Why ? Because it saves money for the business and is convienant for the customer. And if I can save a few dollars by buying in advance, that's just a bonus. Advance ticket sales also give parks a better picture of what they can expect crowd wise in the coming months, makes it easier to plan staffing requirements,add show,etc.

 

[EUROPA]

Originally posted by KNWVIKING
Advance ticket sales also give parks a better picture of what they can expect crowd wise in the coming months, makes it easier to plan staffing requirements,add show,etc.

How does this work with theme parks exactly. When you buy a pass online...either single, multi, or annual it does not have a specific date to use by. So how would Disney know if they sold 25,000 tickets online when they will be used? Are they just going to add a show and guess when the people are coming?


I'm pretty sure Disney uses Hotel bookings on property and off to gauge hours,shows and so on. Or at least they try even though they micromanage it to death and tick off the very large portion of their fans that like to plan ahead.