Analysts see strong Q3 for Disney
Reuters 8/4/06

Analysts see strong Q3 for Disney

LOS ANGELES (Reuters) - Walt Disney Co. is expected to post a higher quarterly profit on strong sales in its entertainment business, but growth will slow as it absorbs charges from a bold strategy launched by Chief Executive Bob Iger, analysts say.

Disney is scheduled to report results on August 9.

Since October, Iger has presided over the purchase of Pixar Animation Studios, the sell-off of radio stations and in July announced a refocusing of Disney's studio division to cut movie output and eliminate 650 jobs, or 20 percent of personnel.

While the studio cuts are expected to ultimately save $100 million, some analysts estimate they will add severance charges for some of $20 million to $30 million for Disney's 2006 fiscal year, which ends in September.

The all-stock Pixar purchase was already expected by Disney to dilute earnings by 10 cents a share in fiscal 2006.

Sanders Morris Harris analyst David Miller said Disney's consumer products division had a "monster quarter" due to merchandise from the Pixar animation 'Cars' and Wall Street was waiting to see how well the theme parks fared.
"The theme park line will get a lot of attention. A lot of analysts are anxious to see whether Disneyland (and other parks were) affected by high gas prices," Miller said.
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