Walt Disney Company profits down 32 percent

[MM32830]

Ouch...

Story from OrlandoSentinel.com:




Walt Disney Co. profits dropped 32 percent at close of 2008

Jason Garcia

Sentinel Staff Writer

4:38 PM EST, February 3, 2009


Profits at the Walt Disney Co. fell 32 percent during the final three months of 2008, dragged down by falling DVD sales, weakened advertising revenue, and lower attendance at its theme parks.

Disney said it this afternoon it earned $845 million, or 45 cents a share, during its fiscal first quarter, down from almost $1.3 billion, or 63 cents a share, for the same period a year ago.

The results, which include a gain of 4 cents a share from the sale of investments in two Latin American pay-television services, missed Wall Street's expectations. Analysts had predicted average earnings of 52 cents a share, based on a survey by Thomson Reuters.

Total revenue fell 8 percent to $9.6 billion.

The company's parks-and-resorts division reported both lower revenue and operating income for the three months that ended Dec. 27. Revenue was down 4 percent to $2.7 billion, while operating profit fell 24 percent to $382 million.

Disney blamed the division's performance on sagging results at its U.S. resorts and at Disneyland Resort Paris. Both attendance and occupied-room nights fell at Walt Disney World and at Disneyland in Anaheim, Calif.

The company said it only partially offset the losses with cost cuts.

"We faced a challenging first quarter with many of our businesses impacted to various degrees by the economic downturn," Disney President and Chief Executive Officer Bob Iger said in a written statement. "We are forcefully confronting current circumstances while investing in the great creativity, brands and assets that are Disney's strengths and keys to its long-term success."

Copyright © 2009, Orlando Sentinel

 

[mshoo1]

I'm surprised by the large gap between profits and revenue. The parks took in only 4% less money than they did the previous quarter but their profits dropped by nearly 25%. I'm guessing that hotel/vacation discounts and reduced merchandise sales are largely responsible, because I can't imagine that their costs spiked that much.

 

[OKW Lover]

Minor point, but the story actually says that the Walt Disney Company's profits were down 32%, not WDW.

Keep in mind that Disney owns lots more than just the theme parks.

 

[SamIAm21]

Gee, if only they'd raised those stroller prices just a little higher...

{{sarcasm intended}}

I would have to say that raising those stroller prices was on par with the whole Coke/New Coke debacle in the 1980s. What a horrible time to raise prices on something so essential to a young family's enjoyment of the parks.

 

[MM32830]

Minor point, but the story actually says that the Walt Disney Company's profits were down 32%, not WDW.

Keep in mind that Disney owns lots more than just the theme parks.

You are absolutely correct. In my haste to get this posted quickly, my fingers were only thinking about the World and not the entire company.

The title has been changed.



_________________
Armand

 

[MM32830]

I'm surprised by the large gap between profits and revenue. The parks took in only 4% less money than they did the previous quarter but their profits dropped by nearly 25%. I'm guessing that hotel/vacation discounts and reduced merchandise sales are largely responsible, because I can't imagine that their costs spiked that much.

The problem is that when they offer great deals like buy 4 get 3 free, the operating expenses are not reduced but revenue is. They are paying for all the expenses related to a 7 day stay but only receiving 4 days worth of revenue.

I'm not saying that was a bad move. If they had not done that (and other promotions), the picture would have looked a lot worse.



_____________________
Armand

 

[DWFan4Life]

The problem is that when they offer great deals like buy 4 get 3 free, the operating expenses are not reduced but revenue is. They are paying for all the expenses related to a 7 day stay but only receiving 4 days worth of revenue.

I'm not saying that was a bad move. If they had not done that (and other promotions), the picture would have looked a lot worse.



_____________________
Armand

I agree, in a sense that it reduced their revenues but they would not giving offers like that if they don't benefit something, right?

 

[schoen]

WESH 2 news this morning was reporting that management buyouts and layoffs are on the horizon for the disney company. It is too bad that every industry is getting pounded so hard right now.

 

[DizzyFORDisney]

Good time to buy some stock?

 

[MM32830]

WESH 2 news this morning was reporting that management buyouts and layoffs are on the horizon for the disney company. It is too bad that every industry is getting pounded so hard right now.

There currently is a managgement buyout throughout the Walt Disney Company. 619 executives have been offered a buyout, 313 of those are in the Orlando area. They have until this Friday to accept the buyout or layoffs will be coming.


_______________
Armand

 

[MM32830]

Good time to buy some stock?

Maybe. If you have the stomach to endure the wild swings you will be experiencing.

I just bought more DIS stock. I know this will be a good LONG TERM investment. Disney is a victim of circumstances. Their stock price is down because the economy and not any bad business practices.


_________________
Armand

 

[ADP]

Good time to buy some stock?

Boy...You'd like to think so, but just when you think it can't get much worse....It does.

 

[CynthiaC925]

I'm sorry but how much do stockholders want? Really, the greed is too much sometimes.

and the media is always misquoting - Disneyland Paris is posting 90% occupancy in its hotels and record profits. and I just heard that WDW is experiencing 17% increase 01/09 vs 01/08. I work for a bank that just got maligned by a media report-the report was so inaccurate it was unbelievable. And of course the retraction/correction never gets the headlines that the erroneous report got.

US analysts' vision is always so short term-they never take the long view.

 

[MM32830]

I just heard that WDW is experiencing 17% increase 01/09 vs 01/08.

A 17% increase in WHAT? Revenue? Attendance? Hotel Occupancy? Profits?

You can have all the revenue you want but if your expenses are greater than the revenue, your profits are nada.

Same with attendance and hotel occupancy. People may come but will they spend?

When it comes to the end of the day, the only thing that matters is PROFIT. Many might consider that a dirty word but the realization is that without profits, companies don't exist. Is just that simple.



____________________
Armand