Earnings Report Looking better

[Galahad]

From CBS MarketWatch:

Disney reports 13 cents net profit, beats estimates (DIS) By Russ Britt
Walt Disney Co. (DIS) reported a profit of $259 million, or 13 cents a share, for the second quarter Thursday, 3 cents above Thomson Financial/First Call consensus estimates of 10 cents. Last year the company lost $567 million in the quarter. The company said its revenue for the period was $5.9 billion, off 2 percent from last year's sales of $6 billion.

Not necessarily great but it sure beats AOL-Time Warner........

 

[Galahad]

But some if the detail shows there is a long way to go....

Parks and Resorts revenues for the quarter decreased 8% to $1.5 billion and segment operating income decreased 15% to $280 million.

Parks and Resorts results for the quarter reflected lower attendance, guest spending and hotel occupancy at the Walt Disney World Resort and lower guest spending at Disneyland, which were partially offset by increased attendance and the absence of pre-opening costs at the Disneyland Resort. At the Walt Disney World Resort, decreased attendance and hotel occupancy reflected the continued disruption in travel and tourism. At the Disneyland Resort, increased attendance was driven by the addition of Disney's California Adventure and Disney's Grand Californian Hotel during the middle of the second quarter of the prior year, as well as strong local attendance reflecting primarily the success of the Annual Passport program. The prior-year pre-opening costs at Disneyland were for the opening of Disney's California Adventure. Lower spending at both Walt Disney World and Disneyland was due primarily to ticket and other promotional programs.

Parks and Resorts results for the quarter also benefited from higher royalties generated by increased attendance at the Tokyo Disney Resort following the opening of the Tokyo DisneySea theme park and the Tokyo DisneySea Hotel MiraCosta during the fourth quarter of the prior year.

 

[Captain Crook]

Maybe not earth shattering but it beats dissapointing the street by .03 for sure. It seems interesting to note that all of the worrisome comments surrounding Disney still centers on ABC (almost) exclusively. I'd hate to eat my words and say that this was a bad investment but why the hell can't they turn this around? It's tv for goodness sake. If they can succeed on Broadway how can they fail on network tv?


Hi Galahad!

 

[Galahad]

Just reading more of the numbers. Broadcast earnings down 84% (the single largest hit is ABC, not tourism and travel.

I've been wondering whether Disney has a problem with ABC that is like a sports program that falls on hard times. We've all seen, say, an elite college basketball program suddenly have problems, start losing games, lose a coach, etc. They get a reputation of being yesterday's game. So now there is a catch-22. They can't recruit good players because they aren't a winning program....but they can't be a winning program until they can recruit good players. Rebuilding ABC could take a very long time.

 

[DVCDAVE]

Network TV is a business they really have no business being in. It is nothing like cable ie(Disney Channel or ESPN) it is a whole nother business unlike anything else they own. Not a lot of imagineering here, just ratings and ad revenue. It should be sold immediately, and cut the losses short. I speak as a shareholder.

 

[MikePezz]

Ok, let's all say it together: SELL ABC!

 

[Galahad]

We probably all have our pet opinions about what they ought to sell or buy first. I'd like to see them get rid of the sports franchises first. There is an arguement for the broadcast business fitting a media giant's business model, but baseball and hockey? Are they making money? Losing money? Has Anaheim been suficiently rehabilitated now that the ownership of those teams is no longer necessary?

 

[Captain Crook]

I agree Galahad, the items on the real perifery should go first and gosh darn it a tv network SHOULD make money... and IMO it is a perfect fit to complement the other venues, despite being a different monster from the specialty cable networks...I'm sure if I were in charge...

 

[Another Voice]

But one has to wonder why NONE of the giant mega media companies are doing well. Disney, Viacom, AOLTimeWarner, Vivendi, even Sony/Coulumbia and GE/NBC.

Perhaps it’s the entire concept of the “soup to nuts” entertainment companies that the real problem here. Disney, in the need to play with the Big Boys, has fallen into the very same tar pit as everyone else and lacks the ability to get out of it.

 

[Bob O]

Im just glad that some parts of the company are going in a postive direction!!! Lets hope disney can fix the problems at ABC, then maybe they could put more time and effort into their theme parks and animation divison.

 

[Galahad]

AV,

I was thinking that very thing last night. Quicken and some other sites let you set up a portfolio of your stocks, etc to track their progress. Quicken compares a stock to its category. Disney is in the "media conglomerate" category. When you put them on the same screen its fascinating. Disney is doing significantly better than almost all of the others. Even with ABC.

 

[Another Voice]

Because Disney has the ability to sphion off cash from its theme parks. None of the other companies has that resource. It's limited, however, and Disney seems to be causing more damage to the theme parks now than it's helping the rest of the company.

On the flip side, if you take AOL out of AOLTimeWarner - the media side of that company is doing termendously well. The success of HBO, 'Lord of the Rings' and Warner Brothers is being overwhelmed by the shortfalls on the Internet through AOL.

 

[Galahad]

The success of HBO, 'Lord of the Rings' and Warner Brothers is being overwhelmed by the shortfalls on the Internet through AOL.

So perhaps cutting thier (Disney's) loses and ratcheting back thier internet play was a good move after all.

 

[Bob O]

The good move would have not to have started GO in the first place!!!!

 

[Galahad]

The good move would have not to have started GO in the first place!!!!

I disagree Bob. The current problem with Disney's quality and content can't be traced to GO. I don't even think you can make the case that it was money that would have been spent on AK or something if not for GO. At the time, Disney was getting heat for being so late into the Internet space.

If Eisner had decline to enter it there is no way he'd be hailed as any sort of genius now for having done so, for having stayed out wouldn't have prevented problems at ABC or the parks or what have you. The original space for GO was wrong and they were a slow to realize that. But the repositioned GO (with a new content management system being worked on today) is probably just the right approach they should be making to the internet.....support for the key businesses....parks, etc. with Disney.com, broadcasting with ABC.com and ESPN.com etc. (There is no way they could survive without a presence for ABC.com for example). What's left of GO gives them the infastructure they need. But there was NO WAY the world needed another portal and basing it on Infoseek was pretty lame. But in the process, they got the server farms, etc. they need to have a web presence (Disney.com gets tons of hits). Farming that out would, in the long run, be much more expensive. (They are already using too may outside folks on the repoositioning of GO....).

Other than that I agree with you completely!

Said another way...$$ for a strong web presence was going to have to be spent. Talk of a merger with an internet company had already begun. What better way to discount that talk on the street and fund the technology efforts needed than to spin up GO? Market analysts look for "actions". Starting GO was an action that got their attention and stopping GO was even more popular. In the meantime, the technology got built and the write downs were smaller than the competition's write downs.

 

[Bob O]

So the fact the GO portal cost the company millions or up to a billion if reports are is a good business decision???? So a company makes a good business decision when it costs the company money??? Since when is it a good business decision when that decision results in major money loss and the company closes down the endeavor.
A internet presence is needed but not one that results in closing down major portions of it because it lost major money!!!

 

[Galahad]

Well sure. Lots of good business decisions cost money. Most large companies lost money getting their web presence together. It was painful, uncontrolled (for everybody, not just Disney) and very costly. Disney did lose close to $1 billion when all was said and done. That is a fraction of what others lost getting into the same position. I don't think Disney would be better off today if they had just avoided the whole thing. They could not have successfully gotten there on-the-cheap.

Companies get slammed a lot for not thinking long term and only worrying about the next quarter. I think there are a lot of long term benefits to what happened with GO. Was it executed in a great way? No. But I think it was/will be salvaged.

 

[Bob O]

So the disney comp. wouldnt be better of if they hadnt lost a billion dollars???? Good business decisions are ones that make money for a company, not ones that lose a billion dollars!!! Just because other companies lost more doesnt mean it was a good decision for disney to start up their own internet portal!!! It was a awful decision that cost the company a billion dollars and just because other companies lost more cant justify their decision making process. With more good decisions like that may be we could lose even more billions of dollars and be a better company!!!
So i guess their is no way to have a internet presence without losing a billion dollars, or maybe a way could have been found without that big of a loss of money.

 

[Galahad]

No. You said it was bad because it cost money. Lots of things cost money. A loss is always bad. But Disney wasn't trying to just add a sales site like and Eddie Bauer, or a promotional site like a Nickelodean. They had to be as broad in their scope as Yahoo to cover their entire world. I agree completely that the execution was terrible. But they did not have the choice of not going there. They really couldn't have gone little. The Disney.com site is a great piece of work and rivals anything on the web. That site alone would be a $100 million project even without GO.

And yes, it would be better if it hadn't lost money. But it wouldn't be better if it hadn't lost money and had a poor web presence (which they don't). I'm just a glass half full guy. Once it's burned money I'd rather look at what the current state is.

 

[Bob O]

The cost of the money is that it was a money losing disaster for the company!!! A billion dollars is alot of money, even for a company the siez of disney. Spending money to make money is good, but throwing away a billions dollars on bad decisions is bad, but of course neither eisner nor the board suffered any reprecussions for their bad decisions, other thna the value of the stock options went down!!!