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  1. #1

    • Former Churro Jockey
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    Is this good news or bad news for DL?

    There was an article today about how Disney is "ruthlessly" trying to cut costs even to the point of taking away company cars from the executives (the horror!) in order to maintain their current profit margin. The entire article is below. Basically what it says is that Disney has had some amazing profits the past few quarters, and so they are doing anything and everything they can to maintain that level of profit. In today's corporate world, companies in general do not accept that there are going to be good quarters and bad quarters, and good years and bad years. They don't look at the average profit over the past year or the past five years as the benchmark for where they should head. They look at the highest possible profits they've had and make that the benchmark, and now they will not accept anything less then that, and will set corporate goals for about 10% or so above that number for the following year. If they don't make those goals, then people get fired and other people with a "proven track record" of exceeding their goals with a previous company will take their place. Now Disney seems to be slightly better then the average company in that I think their are a lot of people within the company at all different positions that really do care about the Disney name and what it represents, but at the same time they are responsible to their shareholders and have to make the shareholders happy first and foremost.

    I was thinking specifically about the article a week ago that showed Bob Iger taking the board of directors out and showing them Cars Land and how successful the investment has been. I am hoping that he is trying to convince them that another large investment somewhere at Disneyland can be just as successful. Cutting costs is never a solution because that only works for a quarter. Eventually you get to the point where you just can't cut anymore, so your fake profits that you posted by reducing costs instead of actually making more money disappear, and because your quality has declined, your sales have declined and in the end, you not only run out of things to cut, but your actual profits go down and everyone gets fired anyway. So I guess we'll have to just wait and see if this extends to the parks and more things get cut, or if they're cutting things that they think are unnecessary expenses IN ORDER to invest more in the parks. Time will tell.

    Here is the complete article:

    Disney Phases Out Executive Car Perks in Iger Profit Push


    http://www.bloomberg.com/news/2013-0...ofit-push.html
    Last edited by penguinsoda; 07-23-2013 at 08:12 AM. Reason: Removed article in its entirety, replacing with a link for copyright compliance
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  2. #2

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    Re: Is this good news or bad news for DL?

    What does this mean for Disneyland? Just more of the same greedmongering that has been going on for the last two decades: CM pay that starts lower than In-N'-Out Burger, CM training that is a pathetic joke compared to the University of Disneyland in the pre-Eisner days, customer service that is shadow of its former self, and an utter lack of creative innovation and originality.

    Meanwhile prices continue to rise and executive salaries and bonuses are in the tens of millions per year.
    "With the acquisition of Marvel and now of Lucasfilm,
    Disney may have finally found the grail. You don't need
    imagination or art. All you need is a brand."

    - Neil Gabler


  3. #3

    • Rock Star Minion
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    Re: Is this good news or bad news for DL?

    Oh, and Rasulo is in Sun Valley Idaho, talking about this.
    That should pretty much tell you what the priorities of the executives are.
    "Here You Leave the World of California Today and Enter the World of, um, er, California Today."

  4. #4

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    Re: Is this good news or bad news for DL?

    Quote Originally Posted by sediment View Post
    Oh, and Rasulo is in Sun Valley Idaho, talking about this.
    That should pretty much tell you what the priorities of the executives are.

    Just tells me he must be on vacation, it is summer time after all, a traditional time to take vacation for millions of Americans.

  5. #5

    • Down Pluto!
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    Re: Is this good news or bad news for DL?

    They could cut back on executive and board member salaries as well. And how about those multi-million dollar bonuses?

    I don't feel a bit sad about execs losing their company cars...







    I am Sambo, and I endorse this signature.

  6. #6

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    Re: Is this good news or bad news for DL?

    SO they push the money out of the hands of one area to go into another...Nothing I haven't seen in other companies. Not to go off topic but welcome to the wonderful world of capitalism. The rich do what they can to stay rich and keep getting richer while they continue to sever money away for everyone else.

    ...As I see it

  7. #7

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    Re: Is this good news or bad news for DL?

    Well as much as I dont think they need the cars.....the tone from Iger seem to be cut costs...how ever they can so....this is never a good thing for the parks

  8. #8

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    Re: Is this good news or bad news for DL?

    They should get rid of executive perks and use the money to reinvest in the parks to attract people back and us increase profits.

  9. #9

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    Re: Is this good news or bad news for DL?

    Disney is clawing ravenously to keep their stock at the top of the entertainment sector. Even though Disney is making lots and lots of money they're also constantly seeking the market's confidence, which is by leaps and bounds harder to satisfy than their consumers and far more fickle than them too.

    Disney has good reason to be scared. For many months Apple's stock has been losing ground simply because the company has refused to unveil any R&D news on the new products they've been working on and then they got hammered again when they announced they will up production in the U.S. over their China controversy. Google on the other hand only received a marginal gain after they unveiled what probably will be the most influential technology of our time, Google Glass!

    This year it seems like Disney is playing it's cards close to their chest. Avatar coming to the parks was announced, to much confusion, but further news of the expansion has gone silent and Disney parks & resorts will not be making any new attraction announcements at D23. About the only thing that they have going for them right now is Disney infiINity and they are trumpeting that thing through all the major video game publications. Disney, unlike Apple, knows how to keep the stock stable in this wacky market, by cutting jobs. Doing this always works in the interim because it's like saying to the market "I'm going to sacrifice human lives so that you don't become skeptical of our projects".

    Think without morals and you have the sensibility of a shrewd investor. Think using morals and you will a poor man in three months or less.
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  10. #10

    • Disneyland Dreamer
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    Re: Is this good news or bad news for DL?

    You guys are reading too much into this I think. I read the examples, and Disney is cutting jobs dealing with aspects of the various business entities which are not in their core competencies. I didn't see the parks mentioned at all. One also has to remember that the parks are hugely capital intensive, and have a relatively high operating cost comparatively, which does not readily lend itself to reimagination through process improvement and technology advancements. Animation on the other hand (one of the areas cut) has had huge technological advancements, so the old school animation crews who would not embrace said technology had to go.

  11. #11

    • Blew By You
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    Re: Is this good news or bad news for DL?

    Free market getting old and worn, capitalism waiting in the wings.

  12. #12

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    Re: Is this good news or bad news for DL?

    Just another example of the rich getting richer by any means necessary. Like someone else mentioned, this isn't limited to Disney, it is the blueprint of 99% of corporate America.
    Last edited by moregumboplease; 07-20-2013 at 08:53 AM. Reason: typo

  13. #13

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    Re: Is this good news or bad news for DL?

    Quote Originally Posted by moregumboplease View Post
    Just another example of the rich getting richer by any means necessary. Like someone else mentioned, this isn't limited to Disney, it is the blueprint of 99% of corporate America.
    That's a little shortsighted. Your 401k/mutual funds probably hold DIS. Thusly, if DIS does better, you get to retire some day (maybe). Corporations aren't "evil" or "greedy", they are a business. Shame majority couldn't be kept with the Disney Family, but as it is now owned primarily by institutional investment funds (and people like you and me), it should return a profit, and as much shareholder value as possible. Remember, if they weren't producing a product at a price people were willing to pay, they'd go out of business. I wish it were less expensive to go to the parks too, but it is what it is, a business, and there seems no lack of people willing to shell out the $ to do so.

  14. #14

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    Re: Is this good news or bad news for DL?

    Conversely, this recent Nintendo announcement came as a breath of fresh air, and makes me glad I'm spending so much money on Nintendo 3DS games:

    Layoffs are not the solution - Nintendo's Iwata
    "If we reduce the number of employees for better short-term financial results, employee morale will decrease, and I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world."

    Gamasutra - News - Layoffs are not the solution - Nintendo's Iwata

  15. #15

    • Former Churro Jockey
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    Re: Is this good news or bad news for DL?

    Quote Originally Posted by whoever View Post
    You guys are reading too much into this I think. I read the examples, and Disney is cutting jobs dealing with aspects of the various business entities which are not in their core competencies. I didn't see the parks mentioned at all. One also has to remember that the parks are hugely capital intensive, and have a relatively high operating cost comparatively, which does not readily lend itself to reimagination through process improvement and technology advancements. Animation on the other hand (one of the areas cut) has had huge technological advancements, so the old school animation crews who would not embrace said technology had to go.
    That's kind of what I was hoping. They mentioned executive perks, video games, and ESPN. Now, if I were in charge of Disney, the first thing I would do is get rid of all of the extra stuff that they've acquired over the years (do they still have Disney cell phones?) and focus strictly on the parks and movies. So maybe that's all that Iger is doing. He did mention he wanted to cut using a scalpel rather then a hatchet, which sounds good anyway. However, I don't like the attitude of trying to maintain the insane record profits of recent years by doing this. Maybe that was only the attitude of the writer of the article and is not necessarily what Iger is doing. But as the writer pointed out, the record profits were due mainly due to a new cruise ship, the new Cars Land, some blockbuster movies like Avengers, etc. Disney does not have a new cruise ship coming out, nor a brand new land like Cars Land, and The Lone Ranger bombed, so it is beyond unrealistic to think that you can maintain the same level of profit. I understand that Wall St expects that, and I get that probably a lot of their shareholders are people with a 401K who don't even know that they're invested in Disney (in fact, for all I know, maybe I'm a shareholder) and only ever see whether their money went up or down, but Disney is certainly big enough and influential enough that they can say they are not going to focus on increasing profits ever quarter (which is impossible), but are going to focus on the long-term, and invest in their core products, even if it means that they have a down quarter from time to time. A little Mom & Pop company, or even a large company on a downward trend like JC Penny can not do that and survive, but I would think that of the handful of companies in the US that can, Disney would definitely be one of them. Especially since the board of directors just begged Bob Iger to stay on for a few more years, so he's got to feel pretty good about his job security.
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