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Disney's Earnings Dip but Still Top Analyst Forecasts

Tuesday, 05 February 2013 04:44 PM

Walt Disney Co., the world’s largest entertainment company, posted first-quarter earnings that beat analysts’ estimates as the interactive unit registered its first profit and theme parks squeezed out more growth.

Profit excluding items was 79 cents, Burbank, California-based Disney said Tuesday in a statement, beating the 77-cent average of 26 analysts’ estimates compiled by Bloomberg. Sales in the quarter ended Dec. 29 rose 5.2 percent to $11.3 billion, topping estimates of $11.2 billion.

The gain from interactive, along with higher profit from parks and the ABC broadcast unit, partly countered lower earnings from films and cable TV. Disney said Tuesday it will begin making movies based on “Star Wars” characters, in addition to the new movie trilogy already planned after the $4.05 billion acquisition of Lucasfilm last quarter.

First-quarter net income declined 5.6 percent to $1.38 billion, or 77 cents a share, from $1.46 billion, or 80 cents, a year earlier, reflecting lower film studio results. Last quarter’s results included 2 cents in costs related to Disney’s interest in Hulu, the online TV service, and litigation.

Disney shares rose 3.2 percent to $56 in extended trading Tuesday after the results were announced. The stock gained 0.7 percent to $54.29 at the close in New York and advanced 33 percent last year, the third-best performer in the Dow Jones industrial average, which gained 7.3 percent in 2012.

The interactive unit, which produces games and runs websites, posted income of $9 million, the first since the company began breaking out results in 2009. That compared with a loss of $28 million a year earlier.

Profit Pledge

Chief Executive Officer Robert Iger had pledged the money- losing division would be profitable in the current fiscal year. Last week the company closed the Junction Point video-game operation in Texas to cut costs.

Operating income at Disney’s largest and most profitable unit, its television networks, rose 2 percent to $1.21 billion, with ABC posting a 16 percent gain and cable income declining 2 percent on higher programming expenses, the company said. Revenue rose 7 percent, led by the cable networks that include ESPN and the Disney Channel.

Profit at the namesake parks and resorts, the company’s second-largest business, increased 4 percent to $577 million, the company said, as the division registered a 7 percent rise in revenue. Disney has been reaping rewards of recent investments including a new cruise ship launched last year, along with new attractions at its domestic parks.

Studio Results

Film studio profit plunged 43 percent to $234 million, reflecting declines in both theatrical and home entertainment businesses, Disney said.

Profit from the consumer products unit, which sells licensed characters such as those from the “Avengers” film, rose 11 percent to $346 million on sales that grew 7 percent.

During the quarter, Disney also reached an agreement granting Netflix Inc. exclusive streaming rights to its movies starting with theatrical releases in 2016.

The multiyear accord gives Netflix, the world’s largest online video service, rights to movies from Disney and the company’s Pixar and Marvel operations, along with those of Lucasfilm. Some of Disney’s direct-to-video releases will be available on the service starting this year.

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Walt Disney Co., the world's largest entertainment company, posted first-quarter earnings that beat analysts' estimates as the interactive unit registered its first profit and theme parks squeezed out more growth.
Tuesday, 05 February 2013 04:44 PM
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