Another Strong Quarter for Disney

[Ed]

Disney reports another strong quarter

Scott Powers
Sentinel Staff Writer
4:35 PM EDT, July 30, 2008

The Walt Disney Co. reported another strong three-month financial performance Wednesday, this time for the third quarter of its 2008 fiscal year, with earnings of 66 cents a share.

Disney's quarterly earnings included a one-time, 4-cent gain related to the company's re-aquisition of the Disney Stores retail chain in North America. However, even without that bonus, the earnings outpaced the 57 cents a share that Disney offered during the same quarter last year and the 61 cents that analysts had been expecting, according to a survey conducted by Thomson Reuters.

Disney's fiscal third quarter, which ended June 28, generated $9.24 billion in revenue and a profit of $1.28 billion. Both were up from the $9.05 billion in revenue and $1.18 billion in profit that Disney posted during the same quarter in 2007.

"We've had another solid quarter at the Walt Disney Company, further illustrating our creative momentum, the competitive strength of our brands and our ability to cohesively manage a great collection of assets to maximize shareholder value," Robert A. Iger, president and chief executive officer, stated in a news release.

Revenue and operating income were down at the company's studio-entertainment division compared with the third quarter of 2007. But the company's other three divisions all posted higher revenue. The parks-and-resorts division, which includes Walt Disney World, posted a 5 percent increase in revenue to $3.04 billion, compared with the third quarter of 2007. The division's net operating income was $641 million, up 3 percent compared with the same period last year.

The company attributed the parks-and-resorts division's growth primarily to an increase in business at Disneyland Resort Paris, driven by favorable currency-exchange rates and higher guest spending and attendance.

Results at both Disney World and Disneyland in California reflected a decrease in attendance from the same quarter a year ago, which the company said was due to the shift of the Easter holiday from the third quarter in 2007 to the second quarter in 2008. The loss of the busy holiday period was more than offset, however, by increases in corporate-alliance income and guest spending at Disney World, driven in part by higher average ticket prices, the company reported.

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DIS stock closed today at 31.67, +0.75, or + 2.43% :thumbsup:

[ibrowse17]

I just saw a blurb on Hardball that Disney was up over the last quarter:mickey: They said it was because of Disneyland Paris's attendance due to the very weak dollar. All I can say is that I have done my part this year at Disney World:thumbsup:

[GrumpyFan]

Seems like they're sending mixed signals - this appeared today on Reuters:


By Gina KeatingWed Jul 30, 9:00 PM ET


Walt Disney Co (DIS.N) said park bookings were flat and it had detected weakness in advertising sales in the current quarter, sparking fears that U.S. economic woes will hit its results and sending its shares down 2 percent.
The entertainment conglomerate had earlier on Wednesday reported a fiscal third-quarter net profit that beat analysts' estimates by a hair, rising 8.5 percent on one-time gains and strength at its media networks, including sports channel ESPN.


Caris & Company analyst David Miller said the company "overall did very well," adding that investors may have been spooked by the ad sales slowdown at ESPN and wondering "when is this economic slowdown going to hit the parks, if at all?"


Third-quarter net income rose to $1.28 billion, or 66 cents per share, from $1.18 billion, or 57 cents per share, a year earlier. Revenue rose 2 percent to $9.24 billion.


The earnings, excluding a 4 cent gain from the acquisition of the Disney Stores in North America, the sale of Movies.com and a favorable resolution of prior-year tax matters, beat Wall Street's average estimate of 61 cents per share, according to Reuters Estimates.


Chief Executive Robert Iger said on a conference call with analysts that the company continued "to be pleased with the level of business activity we have seen ... and especially with our long-term market position."


Disney shares ended the June quarter down 11 percent from quarterly highs of about $35, as investors worried about the effects of high fuel costs and economic pressures on consumers and the company's theme parks.


"I don't think the forward-looking comments they made were discouraging, everything put together," Standard & Poors Equity Research analyst Tuna Amobi said. "I don't share the sentiment that things are going awfully wrong."


HOLIDAY CHEER


The theme parks posted a 5 percent rise in revenue and 3 percent gain in operating profit, driven by strong performances at Walt Disney World Resort and Disneyland Resort Paris.


Attendance dropped 1 percent at domestic parks, offset by a rise in average guest spending. Hotel occupancy at U.S. resorts dropped to 92 percent from 93 percent a year earlier.


Chief Financial Officer Tom Staggs said hotel bookings at U.S. parks were flat in the current quarter, but "modestly ahead" of last year in the holiday quarter ending in December.


He also said pricing for booked rooms "at this point are at or above the prior year."Iger said diminished airline capacity to Orlando, Florida, had not affected Disney World attendance at all, "nor do we envision, in the near term anyway, that it will be a factor."


Media networks had 8 percent revenue growth and a 9 percent rise in profit last quarter. Contractual rate increases from pay-TV operators and subscriber growth at ESPN and the worldwide Disney Channel accounted for most of the 12 percent revenue increase at the cable networks, while programming and other costs rose 9 percent.


A 2 percent revenue increase in broadcasting revenues, due to higher international sales of TV shows and higher online and other revenue mainly at Club Penguin, offset lower ad revenue at Disney-owned TV stations.


Staggs said the pace of ad sales "has slowed somewhat in recent weeks" at ESPN and, to a lesser extent, its broadcast network due to softness in the auto, financial services and consumer electronics segments.


Staggs said, however, that spot or "scatter" ad sales were pacing "well ahead" of advance sales in the current quarter.


Studio entertainment, whose disappointing "The Chronicles of Narnia: Prince Caspian" promised to drag on company results, saw quarter revenue drop 19 percent and operating profit fall 49 percent because of tough comparisons with last year's blockbuster "Pirates of the Caribbean" sequel.


Revenue from consumer products rose 20 percent, mainly due to the acquisition in May of the Disney Stores in North America, but lower sales of self-published video games led to a 4 percent decline in operating profit in the quarter.


The video game business also suffered from difficult comparisons between sales of "Prince Caspian" and last year's "Pirates of the Caribbean" games.


Staggs said the company expects to see a "modest" reduction in profits for the rest of this year as a result of its reacquisition of Disney Stores in North America.


Disney shares fell 2.5 percent to $30.86 in extended trade from a $31.67 close, reversing its regular-session gain.


So, it sounds like they're expecting things to remain about the same throughout the rest of the year, but no forecast or prediction for next year. It sounds like
they're worried that things are going to get slower after the holidays.