The Walt Disney Co. said it is investigating the early release of its fourth-quarter earnings, which showed an unexpected decline, after shares fell 5 percent in unusually heavy trading about half an hour before a press release was scheduled to go out. The incident follows the guilty plea two months ago of a Disney employee who was trying to sell the early release of quarterly results.
Trading was in a tight range until about 3:29 p.m. Eastern time on Thursday, when the share price plunged $1.81, or 4.9 percent, to $35.39 by 3:33 p.m., before popping back up slightly. The company press release then went out at 3:44 p.m.,16 minutes earlier than normal. Trading volume by the end of the day was more than three times the average at 37.7 million shares.
"We are aware that information regarding our fourth-quarter earnings became available ahead of its formal release and we are investigating how this occurred," Disney's senior vice president of investor relations, Lowell Singer, told analysts on a conference call. "We do regret any confusion caused by this incident."
In September, Bonnie Hoxie, a secretary to Disney's head of corporate communications, pleaded guilty in a federal court in New York to conspiracy to commit securities fraud for trying to sell access to the company's quarterly earnings ahead of their release.
A spokesman did not immediately return a message seeking more information.
The company said in its release that net income in the three months to Oct. 2 fell 7 percent to $835 million, or 43 cents per share, from $895 million, or 47 cents per share, a year earlier. Results were hurt by the shift of some revenue for ESPN to the third quarter and one fewer week in the quarter than a year ago.
Factoring out one-time items, adjusted earnings came to 45 cents per share, down from 46 cents a year ago and a penny below the forecast of analysts polled by Thomson Reuters.
Revenue fell 1 percent to $9.74 billion from $9.87 billion a year ago. That also fell short of forecasts of $9.94 billion.
Advertising revenue rose at ESPN and ABC but the one fewer week tamped down the results.
Parks and resorts revenue fell 1 percent as fewer people closed on Disney Vacation Club properties and domestic parks attendance fell 6 percent.
The movie studio's revenue rose 6 percent, driven by international ticket sales to "Toy Story 3."
In Thursday's aftermarket trading, shares gained 57 cents, or 1.6 percent, to $36.50. Thursday, shares closed down $1.06, or 2.9 percent, at $35.93 in the regular session.
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