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  1. #1

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    Disney's Net Income Falls 32%

    StreetInsider.com - The Walt Disney Company Reports First Quarter Earnings


    The Walt Disney Company Reports First Quarter Earnings

    February 3, 2009 4:02 PM EST
    BURBANK, Calif.--(BUSINESS WIRE)-- The Walt Disney Company (NYSE: DIS) today reported earnings for its first fiscal quarter ended December 27, 2008. Diluted earnings per share (EPS) for the quarter were $0.45, compared to $0.63 in the prior-year quarter. EPS for the current quarter included a gain on the sale of our investment in two pay television services in Latin America, which resulted in a benefit of $0.04 per share.

    "We faced a challenging first quarter with many of our businesses impacted to various degrees by the economic downturn," said Robert A. Iger, Disney's president and CEO. "We are forcefully confronting current circumstance while investing in the great creativity, brands and assets that are Disney's strengths and keys to its long-term success."
    Full quarterly earnings report here

    Listening to the earnings call now and it sounds like Q2 and Q3 bookings are up at the resorts.
    Last edited by ROBONICS95; 02-03-2009 at 02:12 PM.
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  2. #2

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    Re: Disney's Net Income Falls 32%

    I have to admit this past year Disneyland has been pretty dead. No one has the money to go with everyone getting laid off at their jobs!

  3. #3

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    Re: Disney's Net Income Falls 32%

    I also blame a reduction in quality at the parks, not enough big exciting new attracitons, and too much vacation club buildup junking up the place.

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    Re: Disney's Net Income Falls 32%

    They are doing a bunch of remodeling. Im excited for the new watershow at California Adventure! Its going to be awesome!

  5. #5

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    Re: Disney's Net Income Falls 32%

    From the WSJ article on this:
    Disney's theme parks were hurt less severely than during the prolonged recession of the early 1990s, company officials said. Revenue from the Theme Parks and Resorts division was down 4% from a year earlier, but operating income was down 24% to $382 million. Attendance fell 5% but consumer spending stayed flat at the company's domestic parks.
    Mr. Iger said attendance at Disney's domestic parks so far this quarter is ahead of last year, with double-digit attendance growth at Disneyland, in Anaheim, Calif. Advanced bookings for the next few months are pacing ahead of last year's, the company says, owing largely to the promotion.
    Seems like attendance is already rebounding and spending is up. Some of the flat revenue numbers in light of the lower attendance could be due to how they are accounting for the new AP payment program revenue.
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  6. #6

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    Re: Disney's Net Income Falls 32%

    Quote Originally Posted by kimbaloo05 View Post
    I have to admit this past year Disneyland has been pretty dead. No one has the money to go with everyone getting laid off at their jobs!
    At least over the past 2-3 months, I'd say attendance has been remarkably high - and people told me in another recent thread that people are, and will continue to come, regardless - especially with the new payment plans.

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  7. #7

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    Re: Disney's Net Income Falls 32%

    Any attendance problems are largely due to the Florida parks. Disneyland has been amazingly resilient during this recession. However, Florida is sucking wind.

    Times are tough, people may not be able to afford a week long vacation to Florida, but they can drive down to Disneyland from LA with the family for a day. Disneyland is lucky to have 4 HUGE metro areas within a few hours drive. WDW just doesn't have that same luxury.
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  8. #8

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    Re: Disney's Net Income Falls 32%

    I agree with Dusty. This report encompasses the entire company, but if you pulled Disneyland out and posted its earnings stand alone, I think you'd see a different picture. While the previous quarters earnings would still have been a bit flat compared to the rest of the resort side of the company, if this last weekend is any indication, I think the next quarter will have Disneyland holding its own. Between the early start for the 2fer program and the free birthday ticket promo, both parks were extremely busy. I left Tomorrowland at 9:30 at night on a Sunday, and you still could not walk through that section of the park without bumping into massive crowds. I don't think I've ever seen that in the "off" season before.




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  9. #9

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    Re: Disney's Net Income Falls 32%

    Does this mean we will get more direct-to-video sequels? Noooooooo!!!!

  10. #10

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    Re: Disney's Net Income Falls 32%

    Iger's numbers on Domestic Theme Park attendance for Q2:

    DLR:
    Up in double digits from Q2 2008 (Easter falls in Q3 and could have an effect on Q2 results)

    WDW:
    Up mid-single digits from Q2 2008

    Attendance in general:

    DLR:
    Flat since Oct. 1

    WDW:
    Down 2% since Oct. 1

    International Attendance:

    WDW is up from last year, Disneyland is down "modestly."

    Continued long term investments in 2009:

    -DCA
    -DCL
    -DVC
    -Increased capacity at PIXAR

    -They are going to revisit their DVD marketing strategy, too little return and the industry has seen a significant drop in DVD sales.

    -The cost of distributing and marketing DVD's needs to be reduced.

    Regarding Schwarzenagger's proposed tax on tickets:

    -Disney has submitted some convincing information that actually shows how taxing sporting events and theme park tickets would cost the state money, due to a decrease in ticket sales.

    -Likely the tax would be passed on to the consumer but they have not made their decision on whether or not WDC would eat the cost and not charge the consumer tax.

    Cost Reduction Target:

    -Have been spending a lot of time analyzing current cost structure and businesses.

    -More announcements of significant reductions are coming.

    -The feeling is that when the economy rebounds, the company will be better suited for the new norm which will not be the norm we are used to today.

    -There will be reductions in personnel, cost of distributions, marketing, etc. Not just eliminating jobs.
    Last edited by ROBONICS95; 02-03-2009 at 11:57 PM.
    "If you build it right, they will come." - Bob Iger

    "I'm not a literary person. As far as realism is concerned, you can find dirt anyplace you look for it. I'm one of those optimists. There's always a rainbow." - Walt Disney



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  11. #11

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    Re: Disney's Net Income Falls 32%

    The trouble in all this is that from all indicators I am seeing, this economy is likely to get even worse than it is now... Falling home prices are like an economic virus eating up cash in everyone's accounts (even the banks are broke), laying off workers, and these aren't exactly the times people want to "Celebrate" in Disney style. (That isn't a criticism of the marketing plan by the way - it is just unfortunate and times are tough.)

    I expect these numbers to fall even farther in the near future... Mostly because I do not think there has been a full capitulation of the problem... People are afraid of assessing the damage, for fear it will impact them adversely...

    The sad truth is that it will.

    I think Disney needs to sideline it's credit program with Chase (one of the banks that is actually in better shape.) This is for more than obvious reasons...

    But I think their marketing plan should focus on featuring a payment programs similar to Lay-a-way programs. People can afford WDW vacations but they need to know that they don't have to put the cash up front when confronted with looking at $2000+ price tags
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  12. #12

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    Re: Disney's Net Income Falls 32%

    Quote Originally Posted by Dustysage View Post
    Any attendance problems are largely due to the Florida parks. Disneyland has been amazingly resilient during this recession. However, Florida is sucking wind.

    Times are tough, people may not be able to afford a week long vacation to Florida, but they can drive down to Disneyland from LA with the family for a day. Disneyland is lucky to have 4 HUGE metro areas within a few hours drive. WDW just doesn't have that same luxury.
    Disneyland is "lucky" that over 600,000 people have prepaid for admission to Disneyland.
    Robonics, I'm not sure where your DLR increase in attendance is from. Assuming it's true, then it is interesting that revenue dropped while attendance increased. VERY interesting.
    Another intersting tidbit:
    Revenues in domestic parks dropped $107 million, and operating income dropped $123 million. That tells me that there is not a lot of variable expense, i.e., expenses that are caused by revenue. It tells me that cuts in fixed expenses are coming. Maintenance, improvements, general atmosphere, etc.
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  13. #13

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    Re: Disney's Net Income Falls 32%

    Quote Originally Posted by sediment View Post
    Robonics, I'm not sure where your DLR increase in attendance is from. Assuming it's true, then it is interesting that revenue dropped while attendance increased. VERY interesting.
    They reported on Q1 earnings (Oct through Dec) and attendance was down from Q1 2008.

    During the call Iger stated that both Q2 and Q3 attendance and bookings were up from Q2 and Q3 2008, (2008 saw the highest in attendance figures ever). We won't know what the return will be until April-May.

    As of right now, DLR attendance is flat from October 1st, WDW is down 2% since October 1st.

    Sorry for the confusion.
    Last edited by ROBONICS95; 02-04-2009 at 10:11 AM.
    "If you build it right, they will come." - Bob Iger

    "I'm not a literary person. As far as realism is concerned, you can find dirt anyplace you look for it. I'm one of those optimists. There's always a rainbow." - Walt Disney



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  14. #14

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    Re: Disney's Net Income Falls 32%

    Quote Originally Posted by ROBONICS95 View Post
    They reported on Q1 earnings (Oct through Dec) and attendance was down from Q1 2008.

    During the call Iger stated that both Q2 and Q3 attendance and bookings were up from Q2 and Q3 2008, (2008 saw the highest in attendance figures ever). We won't know what the return will be until April-May.

    As of right now, DLR attendance is flat from October 1st, WDW is down 2% since October 1st.

    Sorry for the confusion.
    Lowering the prices is apparently working for January. Whether the fixed costs will be lowered to compensate for the drop in per-guest revenue remains to be seen.
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