Analyst cuts earnings projections for Disney, estimates attendance decline

[puntagordabob]

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.

yeah we did too... lines were plenty long at MK and Epcot was rather busy too but not as much as MK. MK was very very crowded... lines were long, hard to even walk around lol

 

[k5thbeatle]

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.

Obviously you were not around after 9-11-01.

 

[puntagordabob]

Obviously you were not around after 9-11-01.

I know I wasnt ...but in all fairness would you not say 9-11 was totall different than a bad economy? People fearing a bad economy (loss of jobs and everything else bad thats been happening) is IMHO less negative than a foreign attack upon the mainland USA killing thousands of people. People after 9-11 were afraid of another attack and avoidance of public gathering places was a rather common theme for several months (though not all succumbed to this feeling, a large % of the population did).

 

[YoHo]

It isn't busier, over the past 10 years they've shuttered attractions and changed operating hours.
And those are just the macro changes.
They also have the ability to redirect queuing to shorten the lines so they'll spill out. They can cut off the number of fast passes handed out. reduce Castmembers which makes things move slower.

In short, just anecdotally noticing that it's crowded doesn't mean much of anything.

Disney felt crowded for the last 10 years, but from 2000 to ~2007 it actually had a lower estimated attendence year to year. it wasn't till 2007 that they exceeded their record high attendence set in 1999.

And I will garuntee that they aren't hitting that attendence figure in 2008 and 09.
No matter how the queuing and park hours are manipulated.

 

[k5thbeatle]

I know I wasnt ...but in all fairness would you not say 9-11 was totall different than a bad economy? People fearing a bad economy (loss of jobs and everything else bad thats been happening) is IMHO less negative than a foreign attack upon the mainland USA killing thousands of people. People after 9-11 were afraid of another attack and avoidance of public gathering places was a rather common theme for several months (though not all succumbed to this feeling, a large % of the population did).

Good point, fair enough.

 

[Mouseaholic!!!]

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..............

Ok, and where do you actually get the data to support this.

It has been announced that partk attendance at WDW the 4th quarter of 2008 was down 8%.

It has also been announced that the deep discounts Disney is offering has made an impact in advance reservations....they are down only 10% from last year.....and that's GOOD news!!!!

The biggest impact, however, is a larger percentage of the guests that can still afford to travel there are spending far less once they ARE there. We watched that in December. Watch their hands....no longer filled with Disney bags like they were in the past.

2008 was better than Disney anticipated because of the influx of guests from Europe and Great Britian. They are now in recession. Where are all of these guests going to come from to fill the beds like last year?

Perhaps you have not been personally affected by the downturn in the US economy....why not chat with the 73,000 citizens who lost their jobs on Monday and see what their Disney plans look like now.


Sadly, I'll take your bet....because you have already lost when you look at 4th quarter gate. These are tough times for Disney because it is a tough time for their guests. Simple economics.

 

[jimmymac]

For those who think that Disney is recession proof and will continue to thrive in these economic times, a question. Is this 4/3 deal Disney's new idea of philanthropy? Giving away hotel rooms and food? They're hurting and they're trying anything to get heads in the beds. Anything. And I bet the people who are taking these deals are not spending the money inside the parks that they would in days past. In December we were going to MK one evening via the ferry. About 1 in 5 people who were leaving were carrying souvenir bags. Not scientific, I grant you. Why do you think Disney had 50% off sales BEFORE Christmas. Multiple parts of the Disney empire are hemorrhaging. Do you think the stock price has been going down because they'e doing so well?

 

[k5thbeatle]

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

Meanwhile a share of Disney stock is at a 5 year low and almost a 10 year low?

 

[jimmymac]

Meanwhile a share of Disney stock is at a 5 year low and almost a 10 year low?

S&P just revised its outlook on Walt Disney Cio. from stable to negative, saying the company faces more quarters of declining revenue and potentially higher leverage

 

[Mouseaholic!!!]

Here is the S&P brief. Far more comprehensive information on the S&P website for those interested.

Associated Press
S&P cuts Walt Disney rating outlook to negative
Associated Press, 02.04.09, 07:24 PM EST
.Standard & Poor's Ratings Services on Wednesday revised its outlook on Walt Disney Co. to negative from stable, saying the company faces more quarters of declining revenue and potentially higher leverage.

All ratings on the company, including its investment-grade 'A' corporate credit rating which is five notches above junk status, were affirmed.

Walt Disney Co. on Tuesday reported a 32 percent decline in quarterly profit amid a downturn that Chief Executive Robert Iger called "likely to be the weakest economy in our lifetime." Iger also suggested that a broad-based decline of the DVD business was occurring as consumers shifted viewing habits onto the Internet and other formats. Revenue companywide fell 8 percent to $9.60 billion.

Standard & Poor's credit analyst Deborah Kinzer said Disney's recent quarterly performance could extend through the end of its fiscal year, and potentially into its fiscal 2010. Its debt to earnings ratio also could worsen as a result of elevated capital spending commitments and certain fixed-costs inherent in operating its theme parks, studios and other businesses

 

[k5thbeatle]

Here is the S&P brief. Far more comprehensive information on the S&P website for those interested.

Associated Press
S&P cuts Walt Disney rating outlook to negative
Associated Press, 02.04.09, 07:24 PM EST
.Standard & Poor's Ratings Services on Wednesday revised its outlook on Walt Disney Co. to negative from stable, saying the company faces more quarters of declining revenue and potentially higher leverage.

All ratings on the company, including its investment-grade 'A' corporate credit rating which is five notches above junk status, were affirmed.

Walt Disney Co. on Tuesday reported a 32 percent decline in quarterly profit amid a downturn that Chief Executive Robert Iger called "likely to be the weakest economy in our lifetime." Iger also suggested that a broad-based decline of the DVD business was occurring as consumers shifted viewing habits onto the Internet and other formats. Revenue companywide fell 8 percent to $9.60 billion.

Standard & Poor's credit analyst Deborah Kinzer said Disney's recent quarterly performance could extend through the end of its fiscal year, and potentially into its fiscal 2010. Its debt to earnings ratio also could worsen as a result of elevated capital spending commitments and certain fixed-costs inherent in operating its theme parks, studios and other businesses

Aww...they don't know what they're talking about. Besides that and more importantly I was at the park the other day and there was lots of people and there were even lines on the rides!

 

[mitros]

Ok, and where do you actually get the data to support this.

It has been announced that partk attendance at WDW the 4th quarter of 2008 was down 8%.

It has also been announced that the deep discounts Disney is offering has made an impact in advance reservations....they are down only 10% from last year.....and that's GOOD news!!!!

The biggest impact, however, is a larger percentage of the guests that can still afford to travel there are spending far less once they ARE there. We watched that in December. Watch their hands....no longer filled with Disney bags like they were in the past.

2008 was better than Disney anticipated because of the influx of guests from Europe and Great Britian. They are now in recession. Where are all of these guests going to come from to fill the beds like last year?

Perhaps you have not been personally affected by the downturn in the US economy....why not chat with the 73,000 citizens who lost their jobs on Monday and see what their Disney plans look like now.


Sadly, I'll take your bet....because you have already lost when you look at 4th quarter gate. These are tough times for Disney because it is a tough time for their guests. Simple economics.

I'm sort of tired of trying to prove a point, that is, the parks are STILL mobbed! Whether thay have "handfulls" of merchandise is neither here nor there regarding the amount of bodies on property. We made a day visit on January 25th, and the MK was mobbed. Epcot had 1 hour waits for attractions. Went again on the 29th, MK, mobbed, Disney Studios and AK, both had huge lines for attractions. We are going again this Sunday. My whole point.....once AGAIN, is that there are still many, many bodies on property. They may not have handfuls of merchandise, but they are taking up seats in restaurants, and going on the rides and attractions. I don't care about what the economy is doing to Disney spending-wise, but people are still going there in droves, which has been my point all along. I don't feel it is necessary for me to defend my statements when I have being seeing for myself that WDW is STILL crowded!

 

[sandym718]

They may still be "mobbed", but it sounds like they're 8-10% LESS mobbed than last year, and they're paying less to be there, if they are staying onsite. So, attendance HAS declined and the economy IS affecting Disney. personal observations of crowds can't argue what the numbers prove.

 

[mitros]

They may still be "mobbed", but it sounds like they're 8-10% LESS mobbed than last year, and they're paying less to be there, if they are staying onsite. So, attendance HAS declined and the economy IS affecting Disney. personal observations of crowds can't argue what the numbers prove.

Makes no difference what the situation is with the economy. The parks are still crowded.
Cripes, another one misses my point. I give up..............

 

[jimmymac]

Makes no difference what the situation is with the economy. The parks are still crowded.
Cripes, another one misses my point. I give up..............

Maybe everyone else is missing your point because it's not valid. Disney announces that park attendance is down 8% last quarter alone. The Sentinel reports that per capita spending is down almost 40%. Hard to get ADR's are no longer so hard to get.That means fewer people spending a lot less money. The stock price is way, way down. Disney is essentially giving away hotel rooms (4/3 plus a $500 gift card). But you keep those Disney glasses firmly in place and keep drinking the Kool Aid

 

[mitros]

Maybe everyone else is missing your point because it's not valid. Disney announces that park attendance is down 8% last quarter alone. The Sentinel reports that per capita spending is down almost 40%. Hard to get ADR's are no longer so hard to get.That means fewer people spending a lot less money. The stock price is way, way down. Disney is essentially giving away hotel rooms (4/3 plus a $500 gift card). But you keep those Disney glasses firmly in place and keep drinking the Kool Aid

Hah! Gimme a break! I am telling you what I am seeing at the parks. Busy, busy busy! Another one missing my whole point. Please read my posts a little more carefully before you respond...............

 

[Sherwin]

Hah! Gimme a break! I am telling you what I am seeing at the parks. Busy, busy busy! Another one missing my whole point. Please read my posts a little more carefully before you respond...............

Then what are you trying to say? That because you observe that WDW is being mobbed, the company is financially well off?

 

[sandym718]

I guess I don't get what you're trying to say either. Disney has the data, actual numbers, to show attendance is down. Are you disputing that?

 

[Mouseaholic!!!]

Hah! Gimme a break! I am telling you what I am seeing at the parks. Busy, busy busy! Another one missing my whole point. Please read my posts a little more carefully before you respond...............

I don't doubt you think the parks are full....but you cannot confuse Disney's financial reports this week. The only problem is.....Disney's expenses are outpacing their income.

As an example.....did you know Disney hedged their fuel expenses? Southwest did the same thing in 2008 and it created their first quarter loss in many-many years. The problem with Disney and Southwest's hedging.....the cost of oil tanked. Now they are paying MORE than the market price for fuel. Next time you are lucky enough to visit a crowded disney park....take a look at all the busses everywhere.

Yes, I am sure people are in the parks....but Disney reported the guests now are spending 40% less than they did last year. That has a big impact on the bottom line.

Yes, I am sure people are in the parks....but they now are sleeping in disney resort hotels at up to 40% discounts + gift cards and sometimes even free dining. That has to have an impact.

I have not made a disney reservation in YEARS since meeting my DH on BTMRR. Disney long ago stopped sending me post-card mailings to entice me to visit. Now I have one on my kitchen table for $500 for a week-long stay + a $500 gift card.

Yes, I'm sure there are people in the parks, but DCL is now sailing with empty staterooms and BIG discounts to try and fill them. That's a new problem for a successful cruise operation which was envied in the biz for sold-out sailings. How do I know....the castmember discounts for cabins are VERY good and they are available on EVERY sailing -- meaning the ships are not sold out. Once that ship slips out of Port Canaveral, they have lost forever the possibility of selling that cabin which means a loss of bar $, shore excursions $, and every other source of income for that sailing.

Now lets talk about advertising for Disney. How much $$$ do you think Disney is going to collect for 6 months of unpaid advertising on ESPN from GM? Sure, there are people in the parks....but that's a big number and it's going to hurt!

We can also talk about the reduced sales of DVDs and poor performance from their movies in 2008 vs. 2007. Sure, there are lots of people in the parks....but those projections did not match reality for 2008.

I'm not going to touch the DVC sacred cow....but take a look at the list of DVC resales if you have a moment.

Ok, I'm sure everyone is bored now so I'll end the lists.

However, each of these elements is a factor in Disney's bottom line.

Disney will continue to feel the slumping economy - sad but true. This week's reports out of California now confirm it, sadly.

 

[k5thbeatle]

Must be tough to live a life where one is so misunderstood by the misinformed masses?