Disney Shares Slump After Narrow Fiscal 4Q Revenue Beat

The Walt Disney Co. ended its fiscal year on a significant high note, reporting a record $48.8 billion in sales, up 8%, and 22% improvement in net income of $7.5 billion, handily besting analysts' expectations.

Its fourth quarter revenue came in at $12.38 billion, up 7%, while profits rose 8% to $1.49 billion during the period, that ended Sept. 27.

"Our results for fiscal 2014 were the highest in the company's history, marking our fourth consecutive year of record performance," said Robert Iger, chairman and CEO, the Walt Disney Co. "We're obviously very pleased with this achievement and believe it reflects the extraordinary quality of our content and our unique ability to leverage success across the company to create significant value, as well as our focus on embracing and adapting to emerging consumer trends and technology."

Iger extended his contract during the fourth quarter to remain Disney's chief through 2018, opting not to retire in 2016.

Gains during the most recent quarter came from most of Disney's divisions.

Disney's media networks group saw revenue for the quarter increase 5% to $5.2 billion, although operating income remained flat at $1.4 billion. For the year, sales rose 4% to $21.2 billion, while profits were up 7% to $7.3 billion.

ABC is the top rated broadcast network this fall, aided by shows like "Scandal," "How to Get Away with Murder" and "Once Upon a Time," although viewership is down 2% this seasons, and ratings have declined 5% over last year. Disney Channel is No. 1 among its core young audience, and should see a bump for Disney XD with "Star Wars Rebels."

Operating income at ABC increased by $5 million to $163 million for the quarter, due to affiliate revenue growth and higher program sales, which helped offset higher primetime programming costs and lower advertising revenue.

Meanwhile, ESPN continues to be a major draw with NFL games. The sports cabler brokered a new deal with the National Basketball Assn. during the quarter to broadcast NBA games through the 2024-25 season with Time Warner.

Disney's film studio also is enjoying a boon at the box office, with hits like "Guardians of the Galaxy" and "Maleficent" during the quarter helping the company enjoy a 70% surge at the U.S. box office, compared to the same year-ago frame. The studio released "The Lone Ranger" during the quarter last year, which struggled to lasso an audience.

The studio has generated nearly $3 billion at the worldwide box office this year. Next up is Walt Disney Animation Studios' "Big Hero 6," which is generating positive praise from critics.

Overall, the studio earned $1.8 billion during the fourth quarter, a gain of 18%, and $254 million in profits, compared to $108 million last year. Strong homevideo sales of "Frozen" was cited as a high point during the period. For the full fiscal year, sales were up 22% to $7.3 billion, with operating income coming in at $1.5 billion, compared to $661 million in fiscal 2013.

Nearly a year after its release, "Frozen" continues to do brisk business at retail, with the company selling more than three million princess dresses tied to the blockbuster toon in North America this year. The film and Marvel's movies have boosted Disney's already strong consumer products business.

Consumer products sales rose 7% during the quarter to come in at around $1 billion, with profits increasing 9% to $379 million. Sales surged 12% to $3.98 billion, and profits 22% to $1.4 billion, thanks largely to "Frozen," "Maleficent," "Captain America: The Winter Soldier," "Guardians" and Spider-Man merchandise.

Disney's resorts business also saw a 5% uptick in attendance during its fourth quarter, as expansions to Fantasyland at Walt Disney World's Magic Kingdom attracted throngs of guests, as did new additions to its properties around the world, including Hong Kong. The roll out of MyMagic+ has helped increase spending by guests in the parks.

For the fiscal year, the parks biz was up 7% to generate $15 billion during the fiscal year, with profits gaining 20% to $2.7 billion. For the quarter, sales rose to $3.96 billion, helping operating income increase 20% to $687 million.

Disney Interactive also has found its groove through new mobile games like "Tsum Tsum," and console based "Disney Infinity," whose next iteration was released toward the end of the fourth quarter, adding popular characters from Marvel to the franchise.

For the fiscal year, the group posted a $116 million profit, compared to an $87 million loss last year, as revenue rose 22% to nearly $1.3 billion. During the fourth quarter, sales rose to $362 million, up from a loss of $9 million, boosting operating income 13% to $18 million.

Disney's stock has ridden a wave of positive quarterly results, trading above $90 for the first time in August. Investors are also excited about the future slate coming from Walt Disney Studios, which should boost the revenue potential from the company's other divisions, through the release of new "Star Wars" and Marvel movies.

The stock enjoyed a bump late last month when Marvel unveiled its slate of projects through 2019.

It closed at $91 on Wednesday, gaining 70 cents, and rose another $1 on Thursday to end the trading day at $92.