||Bleak Forecast Caps Disney's Fiscal Year
LOS ANGELES (Reuters) - The Walt Disney Co. on Thursday
reported a 78 percent drop in fiscal fourth-quarter net profits
amid weak television and theme park results and warned its
current slump would continue through the next year.
Disney was slammed by a triple whammy of sluggish
advertising and low ratings at its ABC TV network, a poor
economy that trimmed tourism at its theme parks and the Sept.
11 attacks that worsened problems at both.
"The quarter was going to be unimpressive to begin with,''
President Bob Iger told Reuters. "The soft economy and Sept. 11
obviously had an extraordinary impact on our businesses.''
Disney reported a net profit of $53 million, or 3 cents a
common share for the quarter ended Sept. 30, down from $240
million, or 11 cents a share in the year-earlier period.
Revenues fell to $5.8 billion from $6.1 billion.
Excluding charges, pro forma profits for the fourth quarter
were 6 cents a share, a penny below Wall Street consensus
forecast and down from 15 cents a share a year earlier.
Operating profits are expected to get worse for Burbank,
California-based Disney, with its movie studio, ABC and ESPN
television networks and theme parks around the world.
It projected operating profits, which exclude one-time
costs and accounting changes, to be 50 percent less in the
current quarter ending Dec. and 10 to 15 percent less in the
upcoming three quarters, compared to this past fiscal year.
"Management guidance relative to next year was not
optimistic by any stretch of the imagination. Clearly, some of
that is economy related, and some is execution related,'' said
Jeff Logsdon of Gerard Klauer Mattison.
Wall Street will be slashing earnings estimates on Friday,
analysts said, but by how much was not immediately clear.
Disney Chief Financial Officer Tom Staggs told Reuters that
because of the economic uncertainty and the lack of visibility
in coming months, he preferred not to make specific forecasts.
A rebound will depend in large part on the on the economy,
but Disney executives laid out specific plans in a call with
financial analysts to try to rebuild after a tough year.
Actions include reducing capital spending by $500 million
in fiscal 2002 after cutting it by $1.8 billion in 2001,
reducing theme park hours and other operations like food and
beverage services to further cut costs, and shifting ABC
programming to more family-oriented comedies like those in the
1980s and 1990s such as "Roseanne'' and "Growing Pains''.
"The issue becomes when does (Disney) turn around, and I
don't think you're not going to see that until next summer,''
said UBS Warburg media analyst Chris Dixon.
That will likely be too long for investors looking to make
a quick profit on Disney stock, but for investors with a
longer-term horizon extending into 2003 and 2004, Disney's
shares are trading at lower levels than competitors, analysts
Indeed, Disney's stock has been pummeled in recent months
and ended Thursday on the New York Stock Exchange at $18.84.
The earnings release came beyond business hours, and in after
market trading on Instinet, Disney shares slipped 34 cents to
$18.50, nearly 2 percent from its NYSE close.
Since May 22, when most major media stocks began their
recent declines, Disney shares have lost some 44 percent,
underperforming rivals like Viacom Inc. (NYSE:VIA - news), off 30 percent
and AOL Time Warner Inc. (NYSE:AOL - news) off 35 percent.
The sharp drop in earnings capped a non-magical year inside
The Magic Kingdom. Its net income, before accounting changes,
dropped to $120 million compared to $920 million a year earlier
on lower revenues of $25.3 billion versus $25.4 billion.
Including charges and accounting changes, Disney reported a net
loss of $158 million in fiscal 2001.
In January, it cut 400 jobs from its now-defunct Go.com
Internet portal and has since drastically curtailed operations
at its Disney Internet Group, aligning Web sites with existing
business divisions. In March, Disney said it would cut another
4,000 jobs, or about 3 percent of its work force, across all
its divisions around the globe.
Iger said more corporate-wide job cutting was not in the
works right now.
Disney opened its new California Adventure park in southern
California in February, but by June it was clear the park was
underperforming and Disney began discount ticket programs to
spur attendance. Those efforts helped, but the Sept. 11 attacks
have further hurt theme park attendance, particularly at Walt
Disney World in Florida which is heavily dependent on tourism.
On Thursday, Disney said first-quarter attendance at Walt
Disney World was seen being down 25 percent from last year.
The only real bright spots were the company's cable
networks such as all sports network ESPN, which continue to
grow, and the film studio with hit movies like "Spy Kids'' and
''Pearl Harbor,'' and booming DVD sales.
By Bob Tourtellotte
||Friday, November 9, 2001
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||Thursday, November 8, 2001
[News] UPDATE 1-Disney caps fiscal year with bleak forecast (10:00PM)
[News] Bleak Forecast Caps Disney's Fiscal Year (10:00PM)
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||Wednesday, November 7, 2001
[News] FEATURE-Terrorism, recession take toll on showbiz (1:00PM)
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