"Executives of the Walt Disney Co. were continuing to ride an emotional roller-coaster Thursday. While Pirates of the Caribbean: Dead Man's Chest continued to set new highs at the box office, accompanied by solid mid-week results for Cars, shares in the company suffered their biggest drop in more than three years. Disney stock fell 4.1 percent to $28.70 on the NYSE after CIBC World Markets analyst Jason Helfstein cut Disney's rating to "sector underperformer." By midday trading today (Friday), they had dropped below $28.00. Bloomberg reported that analysts are divided on Disney, with an equal number of "buys" and "holds" and two "sells." Earlier this week, Daily Variety and the Los Angeles Times reported that Disney was expected to engage in extensive cost-cutting, slashing hundreds of jobs and cutting its number of movie releases to eight from its usual average of 18. "
Anybody else want to go find this Jason Helfstein's car and set off the airbags a la Edward Norton in 'Fight Club'?
I'm a little confused about the entire situation. Mr. Helfstein reports that "fewer shows in syndication, difficult ratings comparisons at its ABC network and slower growth at its theme parks division may result in 2007 earnings growth in the single-digit percentage range." First off it was my understanding that ABC led the networks in ad sales for this upcoming year, maybe I was wrong, but a recent thread discusses this idea. At any rate they are ahead of the other networks so why would it be bad for them? Secondly does anyone else foresee a decline in theme park attendance anytime soon, would we not continue to see growth? The 50th is over in a few months but they've already started working on the new campaign which only seems to be adding more press about the parks. Is this just not good enough growth for him?
He then said that double-digit growth is only achievable through cost cutting. Did Disney not announce the day before that they would be "reducing the studio workforce between 20 and 25 per cent and the number of films it makes will be cut from around 18 a year to eight."
So, you can all hopefully see why it's a little confusing that Disney stock dropped more in one day than it has in the last 3 years. Who is this Helfstein fella and why did he make lots of us lose so much money this week?