Analyst cuts earnings projections for Disney, estimates attendance decline

[crazy4wdw]

From the Orlando Sentinel:

Analyst cuts earnings projections for Disney, estimates attendance decline
Jason Garcia, Sentinel Staff Writer
3:06 PM EST, January 14, 2009

Morgan Stanley today lowered its projected earnings for The Walt Disney Co., in part because of concerns that the company's resorts could suffer worse than previously thought amid the global recession.

In a research note to investors, Morgan Stanley analyst Benjamin Swinburne cuts his projected earnings at Disney from $2.05 per share to $1.92 per share. Swinburne cites slowing DVD sales and declining advertising growth at profit-powerhouse ESPN, which Swinburne notes already commands premium ad rates and has heavy exposure to the beleaguered auto industry.

But Swinburne also warns that he expects further downward pressure in Disney's Parks and Resorts division, particularly at Walt Disney World and Disneyland. Morgan Stanley was already projecting a 7 percent combined attendance decline at Disney's two domestic resorts, but now fears that revenues from the resort's hotels will slump even further given Disney's recent "buy four nights, get three free" promotion.

The "swing factor" for Disney's Parks and Resorts division, Swinburne writes, is Disney Vacation Club, the company's Celebration-based time-share arm, which has been a big driver of earnings growth for Disney in recent years.

"There is a significant amount of new inventory available in [Fiscal Year] 2009, however it is uncertain how the macroeconomy may affect sales," Swinburne writes. Morgan Stanley is currently projecting a "small increase" in DVC sales for the year, compared with an estimated 18 percent growth last year.

 

[mitros]

Disney will not, I repeat, NOT be affected by the economy. I have talked to several local folks that have been to the parks within the past 2 weeks and they said it has never been busier.

 

[Luv2Roam]

We were at DHS today. It was busy. Not horrible. But busy.
We arrived alittle after 10:, went to TS Midway Mania, and FP was already for after 5:00 pm! I take it everyone goes there for FP first thing now.
DH noticed not long ago there was no longer a single riders line.

 

[DisneyDadof3]

We were at DHS today. It was busy. Not horrible. But busy.
We arrived alittle after 10:, went to TS Midway Mania, and FP was already for after 5:00 pm! I take it everyone goes there for FP first thing now.
DH noticed not long ago there was no longer a single riders line.

On Dec. 30th, they were gone by 10:05 and on Jan. 1, they were gone by 10:45!!!

 

[CanadianGuy]

Disney will not, I repeat, NOT be affected by the economy. I have talked to several local folks that have been to the parks within the past 2 weeks and they said it has never been busier.

Unfortunately sheer bodies standing in line at attractions running at half capacity to make the parks seem busier doesn't equate to $$$ in the cash registers.

When you visit in two weeks, ask the CM's who accept and rely on tips how things have been going. And note the HUGE discounts on souvenirs, t-shirts etc.

They are NOT making the money they usually do.

And as I stated in the other thread on this topic, the first 17 days of this new year are hardly grounds to make a claim like you are making.

Jan 1 to 6 was Christmas/New Years spillover.

Jan 6 to 11 was the marathon.

And this weekend is a holiday weekend.

Jim Hill claims what you are claiming. But since the 4/3 offer has been extended once and still hasn't been sold out -- and likely to be extended AGAIN..

And since Jim Hill has been way more wrong than right in the last 36 months..

I say let's wait til June 30th to see how the first six months went.. and I suspect the ultimate answer will be "not good."

 

[Jockaroo]

Disney will not, I repeat, NOT be affected by the economy. I have talked to several local folks that have been to the parks within the past 2 weeks and they said it has never been busier.

I don't usually post on this part of the board, but read often! I appreciate your insight to the locals, but want to interject this:

Locals going to the parks typically have passes and therefore are not paying to enter the gate. They can go, ride the attractions, enjoy the shows and entertainment and maybe spend $10-$15 for a counter-service meal. Then they leave. They are not spending the money to stay at the hotels or spending for multiple meals like many travelers who are staying multiple days.

 

[Metro West]

Locals going to the parks typically have passes and therefore are not paying to enter the gate. They can go, ride the attractions, enjoy the shows and entertainment and maybe spend $10-$15 for a counter-service meal. Then they leave. They are not spending the money to stay at the hotels or spending for multiple meals like many travelers who are staying multiple days.

Have you been spying on me? That's exactly what I do.

 

[mitros]

Unfortunately sheer bodies standing in line at attractions running at half capacity to make the parks seem busier doesn't equate to $$$ in the cash registers.

When you visit in two weeks, ask the CM's who accept and rely on tips how things have been going. And note the HUGE discounts on souvenirs, t-shirts etc.

They are NOT making the money they usually do.

And as I stated in the other thread on this topic, the first 17 days of this new year are hardly grounds to make a claim like you are making.

Jan 1 to 6 was Christmas/New Years spillover.

Jan 6 to 11 was the marathon.

And this weekend is a holiday weekend.

Jim Hill claims what you are claiming. But since the 4/3 offer has been extended once and still hasn't been sold out -- and likely to be extended AGAIN..

And since Jim Hill has been way more wrong than right in the last 36 months..

I say let's wait til June 30th to see how the first six months went.. and I suspect the ultimate answer will be "not good."

Oh, so now you figure we have to wait 6 months to prove your point? "not good"? no way. Parks will be filled, as well as the resorts and restaurants. As I said before, we shall see..............

 

[Steffiesunshine]

Oh, so now you figure we have to wait 6 months to prove your point? "not good"? no way. Parks will be filled, as well as the resorts and restaurants. As I said before, we shall see..............

Companies don't report their earnings monthly, so mid-year is a good time to see how the current year is shaping up. Most companies don't have a clear annual financial picture until the end of JAN of the FOLLOWING year.

With Disney giving 40% off to basically anyone who asks on the phone, coupled with the 4/3 deal, I can't see how Disney ISN'T going to lose money. Apparently, they know it too, as evidenced by all the cut backs and reductions in parades/fireworks they are making.

 

[mitros]

Companies don't report their earnings monthly, so mid-year is a good time to see how the current year is shaping up. Most companies don't have a clear annual financial picture until the end of JAN of the FOLLOWING year.

With Disney giving 40% off to basically anyone who asks on the phone, coupled with the 4/3 deal, I can't see how Disney ISN'T going to lose money. Apparently, they know it too, as evidenced by all the cut backs and reductions in parades/fireworks they are making.

I guess I will have to mention this again. My whole point is not how or why Disney is filling the parks, but the fact is that they are filled, packed, wall-to-wall or however one would say it. There ARE a LOT of people, bodies, guests, on property, and there have been for years now, and this will continue to occur. Whether Disneyis making money or not, has not been my point. All I am saying is that the property is full, rides resorts, reataurants, DTD, what ever and where ever, all full.................

 

[Peter Pirate 2]

I guess I will have to mention this again. My whole point is not how or why Disney is filling the parks, but the fact is that they are filled, packed, wall-to-wall or however one would say it. There ARE a LOT of people, bodies, guests, on property, and there have been for years now, and this will continue to occur. Whether Disneyis making money or not, has not been my point. All I am saying is that the property is full, rides resorts, reataurants, DTD, what ever and where ever, all full.................

It seems the parks do remain full, at least on occasion. The other thread had MJ (just back) reporting the week was very slow but Saturday (as I reported) was very busy. So it (the outcome) probably does remain to be seen.

Also, while Disney can manipulate the parks they can't manipulate the resorts so much. The fact that the buy 4 get 3 isn't sold out has to be meaningful.

 

[CanadianGuy]

And the pictures posted on the main ThemeParks board from Saturday ... showing.. well... not very many people..

 

[mitros]

And the pictures posted on the main ThemeParks board from Saturday ... showing.. well... not very many people..

Yea, I saw those pictures. You can take those type of crowd-less photos easily if one wants to make a point. At any given time when the parks are crowded, you can find times of days and areas of the parks that give the impression that it is not crowded. Disney itself usess those types of photos in order not scare people away. Who would want to go if they showed pictures of real crowds?

 

[joliesmom]

Disney will not, I repeat, NOT be affected by the economy. I have talked to several local folks that have been to the parks within the past 2 weeks and they said it has never been busier.

That's funny because I also talked to people who went the exact week last January and they said the park was "dead". I guess it's just a personal perspective. If you think Disney is teflon against this poor economy you're not very insightful into finances.

 

[sandym718]

Disney will not, I repeat, NOT be affected by the economy.

Whether Disneyis making money or not, has not been my point.

Seems contradictory. Whether Disney is making money or not determines whether or not Disney is affected by the economy! Bodies in the park is not economics.

 

[Mad-Jasper]

With Disney giving 40% off to basically anyone who asks on the phone, coupled with the 4/3 deal, I can't see how Disney ISN'T going to lose money. Apparently, they know it too, as evidenced by all the cut backs and reductions in parades/fireworks they are making.[/QUOTE]

Funny you should say that. When I booked our May 09 trip, passholder+dining specials were not released yet, and still aren't. When I balked at the expensive booking, the CM put me on hold for about 5 minutes. She then offered a reservation about 40% less than than the original price.

 

[wall1a]

Can you get 40% off plus b4g3 deal, and is that 40% off of room and meals?

 

[mitros]

That's funny because I also talked to people who went the exact week last January and they said the park was "dead". I guess it's just a personal perspective. If you think Disney is teflon against this poor economy you're not very insightful into finances.

Gee, I'm sorry that I am not as "insightful" into finances as you are, but I went to WDW for a day last week, and it was absolutley mobbed. I am going again on the 25th and again on the 29th I'll see again how "quiet" it is.
My point is not so much that Disney is "teflon" againest the economy, my point is that Disney is dragging more bodies into the parks with these special offers, and these WILL keep the resort crowded, whether Disney is making the money they usually do or not.

 

[Steffiesunshine]

I'll be at MK also on the 29th. We can compare notes when I get back!

 

[mitros]

I'll be at MK also on the 29th. We can compare notes when I get back!

Wear a green carnation.................. Maybe I'll see you there.