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Disney Shares Fall After Iger Says Theme-Park Bookings Decline
By Andy Fixmer
Nov. 7 (Bloomberg) -- Walt Disney Co. fell as much as 6.1 percent in New York trading after the world's biggest theme-park operator said fewer visitors are booking resort vacations in the slowing U.S. economy.
Reservations have ``fallen off considerably'' in the past month, Chief Executive Officer Robert Iger said on a conference call yesterday, after reporting a 13 percent decline in fiscal fourth-quarter net income. Disney is offering discounts and merchandise credits to spur attendance at the parks, where profit dropped 4.2 percent.
Earnings also declined at Disney's television and film businesses. As U.S. consumers pull back spending, advertising cutbacks have led media-industry competitors News Corp., CBS Corp. and Viacom Inc. to lower their forecasts.
``There's little place to hide right now from the recessionary downturn,'' Janna Sampson, co-chief investment officer at Oakbrook Investments LLC in Lisle, Illinois, said in an interview. Disney's ``quarter was uglier than anyone anticipated.''
Disney fell $1.12, or 4.9 percent, to $21.69 at 9:32 a.m. in New York Stock Exchange composite trading after earlier declining to $21.41. The stock had lost 29 percent this year before today.
Net income dropped to $760 million, or 40 cents a share, from $877 million, or 44 cents, a year earlier, the Burbank, California-based company reported. Excluding bad debt from Lehman Brothers Holdings Inc.'s bankruptcy and other one-time items, profit of 43 cents missed the 49-cent average of 19 analysts' estimates compiled by Bloomberg.
Sales increased 5.8 percent to $9.45 billion, exceeding the $9.33 billion average estimate.
Parks Slowdown
Disney reported parks and resorts profit of $412 million, down from $430 million a year earlier. Sales at the unit rose 6.5 percent to $2.97 billion.
Reservations are off 10 percent for parks visits this quarter and next quarter compared with the year-earlier periods, Iger said. Holiday bookings at Walt Disney World near Orlando, Florida, are down 1 percent, he said. Visitors who book four nights will receive an additional three for free, plus a $200 credit to spend on food or merchandise.
``People want to take vacations in 2009 but they are much more value-focused,'' Iger said. ``That's why we have seen bookings fall off somewhat.''
The strengthening U.S. dollar is making the trip to Disney World less affordable for foreign tourists, who have bolstered Disney's parks this year. Resort profit may decline 12 percent this fiscal year as the U.S. economy shrinks, said Barclays Capital analyst Anthony DiClemente before yesterday's report.
Economic Slowdown
Disney is suspending share buybacks to preserve capital because of turmoil in worldwide credit markets, Chief Financial Officer Tom Staggs said on the conference call.
The U.S. economy shrank 0.3 percent in the third quarter, the Commerce Department said on Oct. 30. Gross domestic product will contract 0.7 percent next year, the International Monetary Fund forecast in a report yesterday.
``Going forward, it becomes a question of how long and how deep this economic recession will last,'' Oakbrook's Sampson said. ``And that's very, very difficult to predict.''
News Corp. said this week that profit would decline at least 13 percent in fiscal 2009 as advertisers cut spending by as much as half because of the credit crisis. CBS and Viacom, both controlled by Sumner Redstone, also cut estimates because of the slowdown in ad spending.
TV, Film
Profit in Disney's media networks segment, which includes cable and broadcast television, dropped to $1.06 billion, dragged down by a $150 million loss at ABC as advertisers cut spending. Ad sales at TV stations are ``off considerably,'' Iger said.
Cable networks including ESPN and Disney Channel earned $1.2 billion, a $116 million increase, helped by gains in fee income from cable operators.
Earnings from Disney's film business fell 42 percent, reflecting weaker performance at the box office and marketing costs for ``Beverly Hills Chihuahua,'' released after the end of the period. Profit of $98 million compared with $168 million a year earlier.
Profit at the company's consumer products division, which licenses merchandise and operates retail stores, climbed 14 percent to $176 million. The unit's revenue gained after the May acquisition of 200 retail stores.
Disney said in court documents last month that it's owed about $92 million from Lehman Brothers. The company petitioned a judge to appoint an examiner to investigate Lehman's movement of funds internally around the company's Sept. 15 bankruptcy filing.
By Andy Fixmer
Nov. 7 (Bloomberg) -- Walt Disney Co. fell as much as 6.1 percent in New York trading after the world's biggest theme-park operator said fewer visitors are booking resort vacations in the slowing U.S. economy.
Reservations have ``fallen off considerably'' in the past month, Chief Executive Officer Robert Iger said on a conference call yesterday, after reporting a 13 percent decline in fiscal fourth-quarter net income. Disney is offering discounts and merchandise credits to spur attendance at the parks, where profit dropped 4.2 percent.
Earnings also declined at Disney's television and film businesses. As U.S. consumers pull back spending, advertising cutbacks have led media-industry competitors News Corp., CBS Corp. and Viacom Inc. to lower their forecasts.
``There's little place to hide right now from the recessionary downturn,'' Janna Sampson, co-chief investment officer at Oakbrook Investments LLC in Lisle, Illinois, said in an interview. Disney's ``quarter was uglier than anyone anticipated.''
Disney fell $1.12, or 4.9 percent, to $21.69 at 9:32 a.m. in New York Stock Exchange composite trading after earlier declining to $21.41. The stock had lost 29 percent this year before today.
Net income dropped to $760 million, or 40 cents a share, from $877 million, or 44 cents, a year earlier, the Burbank, California-based company reported. Excluding bad debt from Lehman Brothers Holdings Inc.'s bankruptcy and other one-time items, profit of 43 cents missed the 49-cent average of 19 analysts' estimates compiled by Bloomberg.
Sales increased 5.8 percent to $9.45 billion, exceeding the $9.33 billion average estimate.
Parks Slowdown
Disney reported parks and resorts profit of $412 million, down from $430 million a year earlier. Sales at the unit rose 6.5 percent to $2.97 billion.
Reservations are off 10 percent for parks visits this quarter and next quarter compared with the year-earlier periods, Iger said. Holiday bookings at Walt Disney World near Orlando, Florida, are down 1 percent, he said. Visitors who book four nights will receive an additional three for free, plus a $200 credit to spend on food or merchandise.
``People want to take vacations in 2009 but they are much more value-focused,'' Iger said. ``That's why we have seen bookings fall off somewhat.''
The strengthening U.S. dollar is making the trip to Disney World less affordable for foreign tourists, who have bolstered Disney's parks this year. Resort profit may decline 12 percent this fiscal year as the U.S. economy shrinks, said Barclays Capital analyst Anthony DiClemente before yesterday's report.
Economic Slowdown
Disney is suspending share buybacks to preserve capital because of turmoil in worldwide credit markets, Chief Financial Officer Tom Staggs said on the conference call.
The U.S. economy shrank 0.3 percent in the third quarter, the Commerce Department said on Oct. 30. Gross domestic product will contract 0.7 percent next year, the International Monetary Fund forecast in a report yesterday.
``Going forward, it becomes a question of how long and how deep this economic recession will last,'' Oakbrook's Sampson said. ``And that's very, very difficult to predict.''
News Corp. said this week that profit would decline at least 13 percent in fiscal 2009 as advertisers cut spending by as much as half because of the credit crisis. CBS and Viacom, both controlled by Sumner Redstone, also cut estimates because of the slowdown in ad spending.
TV, Film
Profit in Disney's media networks segment, which includes cable and broadcast television, dropped to $1.06 billion, dragged down by a $150 million loss at ABC as advertisers cut spending. Ad sales at TV stations are ``off considerably,'' Iger said.
Cable networks including ESPN and Disney Channel earned $1.2 billion, a $116 million increase, helped by gains in fee income from cable operators.
Earnings from Disney's film business fell 42 percent, reflecting weaker performance at the box office and marketing costs for ``Beverly Hills Chihuahua,'' released after the end of the period. Profit of $98 million compared with $168 million a year earlier.
Profit at the company's consumer products division, which licenses merchandise and operates retail stores, climbed 14 percent to $176 million. The unit's revenue gained after the May acquisition of 200 retail stores.
Disney said in court documents last month that it's owed about $92 million from Lehman Brothers. The company petitioned a judge to appoint an examiner to investigate Lehman's movement of funds internally around the company's Sept. 15 bankruptcy filing.