JUNE 13, 2006
By Ronald Grover
Disney's Cars Crashes on Wall Street
The film's $62.8 million opening fails to set pulses racing in the financial community. What's going on here?
Full story at http://www.businessweek.com/technolo...612_259953.htm
When is a blockbuster film a disappointment? Only on Wall Street, which seems to have moved this weekend's opening of the Walt Disney-Pixar film Cars off the side of the road into a ditch marked for losers. Merrill Lynch analyst Jessica Reif Cohen, one of Wall Street's smartest, called Cars's $62.8 million weekend take a "disappointing performance." Bank of America analyst Douglas Shapiro points out it "has a couple of negative implications" for Disney shares, and says it "could struggle to gross $230 million domestically."
Excuse me. It will "struggle" to cross $230 million in the U.S.? If it, in fact, wobbles it's way to $230 million this year that would have ranked as last year's fourth-largest film, about 10% or so behind Warner Bros.' Harry Potter & the Goblet of Fire. (I don't recall anyone calling that a disappointment, despite its $140 million budget, about double Car's budget, according to movie site IMDB.com.) As for Car's "disappointing" opening weekend, only three films this year—X Men: The Last Stand, The Da Vinci Code, and Ice Age: The Meltdown—have opened better. Simply put, how is this disappointing?
Of course, it is disappointing because Wall Street analysts had projected that Disney's $7.4 billion acquisition this year of Pixar would turn it once more into a world-beating animation superpower. Reif, for instance, had estimated that Cars would gross $270 million. BofA's Shapiro noted that Pixar's prior four releases (including such huge hits as Finding Nemo) had averaged $275 million—and the difference between a $275 million film and a $225 million film is 0.4 cents per share in Disney's earnings.