CNBC Musings On Disney

[lugnut33]

CNBC had on some guy from S&P whose company just downgraded Disney to sell today.

Couple of highlights (or lowlights depending how you look at them).

- 20% of visitors to theme parks are foreigners and they expect that to drop down to 12-13% during 09/10

- Expects theme park earnings to continue to lower with the worst of it coming in 2010.

- Says Sea World is dying

- Though Disney is a good company, they don't deserve a premium on the stock pricing because travel fundamentals have radically changed.

 

[schmitty]

I wouldn't trust CNBC with any type of financial advise.

 

[chevyrules05]

I wouldn't trust CNBC with any type of financial advise.

x2,

but as alot of what other poeple(professinals) have said is that disney stock is more controled buy the tv and movie industry and not the parks plus as much as I go to disney, there parks are NEVER empty or slow i went last wensday and they was 50-90 minute waits for EVERYTHING even the train had a 20 minute wait! so I don't know why everyone is saying the econmy is horrible at disney it may not be as good but it is deff. NOT BAD!

 

[Condorman]

CNBC isn't so bad.

It's the people who listen to Jim Cramer, and Jim Cramer himself, who should be extradited posthaste.

As for Disney being crowded and nothing being empty, just because you see 3x as many people as usual at the parks doesn't mean Disney is turning a profit. 4+3, 40% pin codes, $500 gift cards, etc. means Disney has to bring in 3x as many people just to break even. A pound of feathers may weigh as much as a pound of lead, but one of them is more valuable, and right now Disney is hemorraging money. Just look at their stock price today compared to six months ago. It's bad.

 

[redrosesix]

- 20% of visitors to theme parks are foreigners and they expect that to drop down to 12-13% during 09/10

I have to agree with this -- only 1 other kid in my daughter's entire grade went to WDW this year, and nobody else is going next year. The exchange rate just makes every other country seem like a cheaper vacation, and our economy is hurting a bit now too.

I also don't know of any sports or dance groups that will be going in 2010 -- they've all decided to put those trips off for at least a year. That would account for an additional 50 or more families from Canada.

And according to WDC's Annual Report, the US theme parks seem to be among the most profitable companies that it owns.

 

[Mouseaholic!!!]

I'm not sure why ANYBODY is surprised by bad news from Disney. They put the information on the table after the last quarter......earning 53% of the $$ from guests this year, crashing advertising dollars on it's television stations. Disney doesn't beg...but it's so desperate it's begging now.

Just got an email to visit Lion King in Las Vegas......$216 for two nights at Mandalay Bay and that includes 2 tickets to the Lion King. Tell me whre Disney is going to make big profits from that.

DH got a post card promotion last month (not a castmember promotion...a real person promotion) $564 for 1 week at a Value Resort....and when you checkin...you get a $500 voucher to use for dining or shopping at the parks. Where is the profit in that promotion.

Finally, tickets....the ONE area Disney NEVER touches. They just announced they are dropping ticket prices at DL. Adults now bay children's prices. THAT is abosolute Disney desperation.

They wouldn't be doing it if the bean counters looking forward did not see dark clouds.

Perhaps CNBC is onto something.

 

[Uncleromulus]

CNBC --per se--is never "on" to anything.
As far as that S&P information--what's new??

 

[DisFlan]

The guy was right about one thing - with the heavy discounts, Disney is pulling ressies forward. People who may have planned trips for next year or later are going this year instead, and repeat trips may not be made in the next couple of years. Not as many people are doing "long" planning as has happened in past years. And this may end up hurting Disney's bottom line in 2010. Depending on heavy discounts isn't a good basis for predicting a double digit "growth factor" for later quarters this year and into next year - and that's what Disney had projected. The only way this might work is if the economy turns around by the end of this year (Disney's fiscal year starts in October), and that's looking less and less likely.

This questionable forward outlook was one of the reasons for the downgrade - along with a downturn in international visitors and no "big" movie releases scheduled in the near future. And he may be right. We'll all just have to wait and see.

DisFlan

 

[redrosesix]

The guy was right about one thing - with the heavy discounts, Disney is pulling ressies forward. People who may have planned trips for next year or later are going this year instead, and repeat trips may not be made in the next couple of years. Not as many people are doing "long" planning as has happened in past years. And this may end up hurting Disney's bottom line in 2010. Depending on heavy discounts isn't a good basis for predicting a double digit "growth factor" for later quarters this year and into next year - and that's what Disney had projected. The only way this might work is if the economy turns around by the end of this year (Disney's fiscal year starts in October), and that's looking less and less likely.

This questionable forward outlook was one of the reasons for the downgrade - along with a downturn in international visitors and no "big" movie releases scheduled in the near future. And he may be right. We'll all just have to wait and see.

DisFlan

Their fiscal year starts in October? Interesting choice.

Also, wanted to make a note about DL ticket prices that a PP mentioned. Sure, they've reduced the adult ticket price to be the same as the child's. When the economy gets better, will they increase just the adult price? Probably not -- they'll keep them the same and increase both.

Cynical, I know, but I'll bet I'm right, especially if they do the same at WDW.

 

[Mouseaholic!!!]

Their fiscal year starts in October? Interesting choice.

Also, wanted to make a note about DL ticket prices that a PP mentioned. Sure, they've reduced the adult ticket price to be the same as the child's. When the economy gets better, will they increase just the adult price? Probably not -- they'll keep them the same and increase both.

Cynical, I know, but I'll bet I'm right, especially if they do the same at WDW.

When times are good every discount offered will quietly disappear....including to their loyal return guests. That was when my rose-colored glasses were knocked off my head a few years ago.

 

[deej696]

None of this information is new. With the annual shareholders meeting today, Disney just happened to be in the eye of CNBC. I watch CNBC every day, and yes I'm sure this "analyst" is a very smart guy, but you can also find other "analysts" that would rate Disney a buy for many reasons. Posting a sell rating when the stock has already been pummelled is like placing a bet on the Yankees in the 8th inning with a 6 run lead. He's about 18 months late....

 

[mickey2000]

Its not just CNBC ..........


DIS attracted a considerable degree of attention this morning from both analysts and options traders. Ahead of the open, Pali Capital downgraded the shares to "sell" from "neutral," stating "while Disney has one of the best secular asset mixes within the media sector, essentially everything is going wrong at the same time, with the length of pain likely to extend further than we had previously expected." Pali slashed its 2009 earnings estimate for DIS to $1.63 from $1.82, and cut its 2010 expectations to $1.45 from $2.04 per share.

 

[redrosesix]

Regardless of the stock or how much I believe in a company, Sell means Sell -- they don't make this recommendation lightly. More importantly, large investors won't hold a stock that has just been downgraded to Sell -- they might buy up shares when it is close to bottom, but they'll let them go at least in the short term. It's just not prudent to hold a stock that you know is going to fall in price.

If I owned stock in WDC right now, I'd probably sell even if I was just thinking about re-buying at a lower price so I could have a more profitable long term hold.

 

[deej696]

A sell rating from a Wall Street house is simply a way to get your name in the paper, or in this case be asked appear on CNBC. Why? Because Sell ratings are rare and as a result more newsworthy than a "buy." These guys are supposed to be the brightest financial guys in the world, yet when the recession started they didnt think people would stop going to Disney? So they rode a buy rating all the way down 50% and now decide it must be a sell? Its a joke...

 

[Brer Chump]

DIS is going to $12 before $20. TV will be the next to division to bring down the Company. The strong dollar and EU being in worse shape than the US won't help the Parks and Resorts division either.

 

[Uncleromulus]

If these "analysts" really knew what they were doing, they would all be rich. VERY few actually are. THis guy is just one of many who may be right THIS time--or he may be wrong.
Fact is that the ENTIRE stock market is in turmoil and people will decline to buy anything until they can guess what the bottom will be.