Disney Profits Bring Out Doomsayers on Wall Street - MiceChat News Team, 11/10/06

[disneytim]

In the wake of Disney's report of record earnings in fiscal 2006 and a doubling of quarterly profits, Wall Street is bailing on the Mouse.

Concerns that Disney has peaked and can't possibly maintain the profit and growth it experienced this year has triggered a sell off of Disney stock. So far today, Disney's stock price has dropped over 3% and is selling in the $32.50 per share price range.

Typical of the naysayers is MSN Money analyst Robert Walberg who says:

After years of stagnation, Disney is hitting on all cylinders thanks to the creative talents of its employees and the cost-cutting efforts of management. Yet for the stock, the good times are about over. It will be nearly impossible for Disney to duplicate its success going forward -- especially now that expectations have caught up with performance.

For Disney's stock to extend its 41% run since bottoming January, the company would need to deliver double-digit top and bottom-line growth for many quarters to come. That will be very difficult, considering that the company just enjoyed a near-perfect year when everything went its way.

Read the full story here.

Not everyone's outlook for Disney is dismal, though. This from Rick Aristotle Munarriz at The Motley Fool:

Beyond the numbers, it's comforting to see Disney hitting on all cylinders. It's also good to know that Disney isn't going to coast along and ride cost controls into the future. Capital expenditures will inch up in fiscal 2007 as the company invests in new theme park attractions as well as new media initiatives.

Read the full story here.

Has Disney set itself up to be a victim of its own success, or is Bob Iger pushing the company in a bold new direction that will build on its recent achievements? Is this the start of something big, or the beginning of the end for Disney?

Your thoughts?

--disneytim--

[Disney Wrassler]

I think Disney will be okay in the end. If they notice their stock continue to go down because of what they are doing, then I am sure they would take a different approach to bring stock back up.

[cellarhound]

My question is, did everything go disney's way? And if so is there room for growth in the segments? Iger didn't really forcast anything... This needs to be addressed - which means he is going to have to talk to investment groups.

I reviewed the investors yearly earnings disclosure, and I am not completely convinced it is firing on all cylanders...

Operating Income of the Broadcasting is down this quarter yet up for the year... The emphasis of course is Cable programming which is a power house, essencially the main cash pipeline of the company, mostly because of ESPN dominance.

And the Movie Studio got lucky having a banner year with one of the most profitable films it EVER made. POTC: Dead Mans Chest. However I am not convinced that reducing investment in the segment is what Iger should be doing. But there is room for improvement in Touchstone and Miramax. I also think furthering Real D and digitial projection will eventually improve studio's bottom line... I was surprised also that Cars wasn't released in Real D.

Continuing to development of lesser parks through added investment into WDI will actually make the segment grow as well. If you notice it is the second revinue driver.

Perhaps investors have gotten so used to Disney "covering it's butt" with record returns from one segment to cover for a failure in another... When something doesn't go wrong, they get worried...

There is room to grow... But Iger needs to get out there and talk to people and say what is going to happen not just point to what is happening.

[nish221]

Bob is definitely exploring the fringes and that is exactly what you need to do.

Honestly speaking, long term (5-10 years) and even short term (next year), I
see WDC going gangbusters... the only segment that I'm mildly worried about
(for not meeting the current growth curve) is Resorts since that got a HUGE
boost from the DL's 50th.

My reasons:

* WDC has one more PoTC movie and a whole series of Narnia
* Ratatouille looks really good
* The other movies concepts so far sound good (even American Dog)
* Return of 2D will be at least get some pub.
* ABC going still strong (although I'm not sure if they can keep up the
momentum)
* Cable (and ESPN) still growing.
* Merchandise (Toys, etc) is *still* going gangbusters.

Completely my two cents....

[cellarhound]

Just picked this off the ticker...

Wall St expects Iger encore, Disney shares fall

Reuters 11/10/06

Wall St expects Iger encore, Disney shares fall

LOS ANGELES (Reuters) - After a busy first year spent buying Pixar Animation Studios and slashing costs, Walt Disney Co. Chief Executive Bob Iger is under pressure to produce a strong second act to keep profit growth in double-digits.

...


Lower pension costs coupled with higher ticket prices and per-capita spending at Disney's theme parks could offset difficult comparisons with last year's record attendance from Disneyland's 50th Anniversary celebration promotions.

"Performance of Disney's U.S. theme parks is the biggest concern," Merrill Lynch analyst Jessica Reif Cohen wrote in a note to clients on Friday. "Given strong booking trends in (the first quarter of 2007) and continued high occupancy rates, we do not expect a deterioration in the coming year."

The company on Thursday reported flat advance bookings at domestic parks for the current quarter versus last year's record-setting holiday attendance.

Sanders Morris Harris analyst David Miller had warned clients in a note that the market might "penalize" Disney on Friday since investors were used to seeing annual growth in advance bookings in the "high-single digits."

Full story - Wall St expects Iger encore, Disney shares fall

[cellarhound]

From the looks of it, we are going to see higher prices in Anaheim in the short term... (Duh!)

And maybe a speed up of plans for a new hotel? (Something to look for - keep in mind I am just reading tea leaves here as to how Glendale may react.)

[DisneyMickey]

Why is it when Disney does so well, sources like Wall Street must be so doubtful. Instead of saying, "they have done so well, we are looking forward to the future," they have to assume it will go back down hill again?

Disney has a very promising future as far as the movie divison and parks division goes. In the long term with a hopeful return to 2D animation, Pixar's future movies, a lot less of the crap from ToonStudios, and investments in their resorts (Anaheim most importantly since it really is a "cash cow"), they have a lot of things to utilize.

Rather than 3-5 years ago, with animation taking a turn for the worst, the parks falling apart from cutbacks, strategic planning still over-running everything, and every other divison going corrput, it was looking very dismal.