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Disney's Quarterly Earnings Beat Estimates

May 04, 2000|JAMES BATES | TIMES STAFF WRITER

Bolstered by robust advertising at the ABC network and ratings from the hit game show "Who Wants to Be a Millionaire," Walt Disney Co. posted higher than expected earnings in the fiscal second quarter.

But the company acknowledged that business continues to be soft for its two most troubled areas: consumer products and home video.

Excluding results from its 72% interest in the Go.com Internet venture--the way Wall Street has been measuring Disney's results lately--Disney posted a profit of $369 million, or 18 cents a share, up 31% from $281 million, or 13 cents a share, a year earlier. Analysts had expected 14 cents a share, according to First Call/Thomson Financial.

Including losses from Go.com and related amortization, Disney's profit was $161 million, or 8 cents a share.

Revenue climbed 14% to $6.2 billion.

Salomon Smith Barney analyst Jill Krutick said that the advertising market was surprisingly strong, and that results from Disney's theme parks also were good.

In consumer products, Disney has suffered for some time from disappointing merchandise sales and sluggish results from its company stores.

Chairman Michael Eisner, speaking to analysts in a conference call, predicted that consumer products will recover under new managers installed last year.

"Unfortunately, like the proverbial battleship, it cannot turn on a dime. Maybe on a 50-cent piece," Eisner said.

In home video, Disney's has not had the number of animated films available for release that it has had in the past.

Animated films have historically been the driving force behind Disney's home video results and are especially profitable because the company does not have to divide profits with stars and directors.

Eisner said Disney was encouraged that the animated film "Tarzan" performed well on DVD.

Chief Financial Officer Thomas Staggs said the company's film unit was hurt in the quarter by two disappointing films, "Mission to Mars" and "The Cradle Will Rock."

Operating income at Disney's networks, which includes both ABC and cable networks such as ESPN, was up 48% to $537 million. Although Disney has stronger results from ABC, the cost for its sports programming was high as well.

Disney's earnings have finally turned around the last two quarters, driven largely by the results at ABC and the TV phenomenon "Who Wants to Be a Millionaire."

New Disney President Robert Iger said the company expects advertising sales to continue to be robust through both the third and fourth quarters.

Disney's stock closed at $41.25 on the New York Stock Exchange, down $1.75.

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