Walt Disney Co. (DIS), the world’s biggest theme-park operator, fell the most in two years after second- quarter profit missed estimates, as a shrinking box-office, a park shortfall and the Japanese tsunami overshadowed TV gains.
Disney, based in Burbank, California, dropped $2.39, or 5.4 percent, to $41.52 at 4 p.m. in New York Stock Exchange composite trading, the biggest decline since March 2009. The stock has gained 11 percent this year.
Profit at Disney’s theme-park unit, which collects licensing fees from the Tokyo resort, fell 3.3 percent in the wake of the March 11 disaster. U.S. parks were hurt by this year’s later Easter break. The film studio failed to match last year’s results from “Alice in Wonderland,” with income down 65 percent on box-office letdowns such as “Mars Needs Moms.”
“The noisy elements, the studio and Japan, clearly were the problem and they are hard to predict,” said Matthew Harrigan, a Wunderlich Securities analyst in Denver who recommends investors buy Disney shares. “The good news is that the core of this company, ESPN and its TV business, still performed very well.”
Net income decreased 1.2 percent to $942 million, or 49 cents a share, in the quarter ended April 2, from $953 million, or 48 cents, a year earlier, Disney said yesterday in a statement. Earnings missed the 58-cent average of 14 analysts’ estimates compiled by Bloomberg. The rise in earnings per share reflects stock buybacks.
Advance bookings at Disney parks are down 2.5 percent from a year earlier, Chief Financial Officer Jay Rasulo said on a conference call.
Room rates have increased by a double-digit percentage, reflecting the decision to phase out discounts as the economy improves, Rasulo said. Excluding the impact of the timing of the Easter holiday, domestic theme park attendance increased by 2 percent from a year earlier, he said.
The March 11 film release “Mars Needs Moms” cost $150 million to make and generated $20.9 million in U.S. ticket sales, according to Harrigan. Last year, Disney’s home entertainment sales benefited from Pixar’s movie “Up.” So far this year, industry DVD sales are down at least 20 percent, according to an industry group.
Disney’s total sales rose 5.8 percent to $9.08 billion, trailing the $9.19 billion average of 20 analysts’ estimates. Revenue was $8.58 billion a year earlier.
“Our revenue was up nicely but we had $170 million of factors, basically, that had an impact on where we were and where the Street thought we would be in terms of our earnings,” Robert Iger, Disney’s president and chief executive officer, said in an interview on CNBC.
Revenue at Disney’s media networks increased 12 percent to $4.32 billion, buoyed by advertising and affiliate revenue at cable networks such as ESPN. Profit rose 17 percent to $1.52 billion, with cable earnings up 15 percent.
ABC broadcasting posted a 4.5 percent increase in revenue to $1.5 billion on advertising growth and higher affiliate fees. Profit gained 36 percent to $167 million.
Profit in consumer products increased 6.8 percent to $142 million as sales expanded 5 percent to $626 million.
Disney’s Interactive unit saw its loss more than double to $115 million on a 2.6 percent gain in revenue. Results included a $34 million cost linked to how the company accounts for the purchase of Playdom, Iger said.
The company will continue to take charges for the 2010 acquisition of the social game startup.
“That was unexpected and we’d like to hear more about that,” said Robin Diedrich, an analyst with St. Louis-based Edward Jones & Co., who recommends investors buy Disney. “But it’s a small segment of the company. The main segments -- advertising and its parks -- are doing well.”
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