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Thursday, November 06, 2008
Disney's Shares Fall After Weak Profit Report
Kathryn Glass
FOXBusiness
Walt Disney Co. (DIS) reported disappointing earnings due to a decrease in revenue from its studio entertainment division and weak numbers overall as expenses increased.
The company weighed in with adjusted earnings of 43 cents per share on $9.45 billion in revenue for the fourth quarter. Net Income for the quarter was $760 million while GAAP earnings came in at 40 cents per share, down 9% from profit of 44 cents per share reported in the year-ago quarter.
This was a disappointment to analysts, who had expected profit of 49 cents per share, according to a poll by Thomson Reuters. The company posted higher than expected revenue, however; analysts had predicted Disney would post $9.3 billion in revenue.
Earnings per share for the year came to $2.28, slightly higher than last year’s earnings of $2.25 per share.
Revenue from studio entertainment sank to $1.45 billion, a 5% decrease from the same period one year ago.
The entertainment giant reported revenue of $2.97 billion from its parks and resorts department in the fourth quarter, a 7% improvement from the year prior -- but profits fell 4%. Revenue from Disney’s media networks rose 4% to $4.21 billion in the fourth quarter, and increased 7% for the year from $15.1 billion to $16.12 billion -- but here too, profits fell 4%. Advertising revenue increased at Lifetime network, as well as at ESPN, and domestic Disney Channel; however, advertising dollars for broadcast networks ABC and at the company’s owned television stations decreased, while production costs rose.
Shares of Disney were trading 13% lower on Thursday after the market closed, and Dow Jones Newswires reported that the company was planning to unveil discounts for some consumers at its parks.
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Most folks judge the health of a business by the revenue that comes in through sales. But not all revenue is equal. Companies can grow their sales by buying other companies, which means you don't get a clear view of how the real sales trends are moving.
So, many analysts, particularly those who look at retail, try to gauge what¿s known as "organic" growth, by looking at same-store sales. These are sales only at outlets open more than a year, so the metric can exclude any sales jump that comes from opening new locations. Retailers release same-store sales (which are frequently called "comps" since they're a true comparison from the previous period) every month.
Retail, incidentally, isn't the only industry to look at same-store sales. Hospital companies, also use the metric, to gauge how existing hospitals are performing compared to ones they just built or acquired.
