Disney Profit Blows Past Forecasts; Shares Jump with Wires

Walt Disney posted on Tuesday a quarterly profit far ahead of Wall Street targets on strong results at its theme park, media and consumer products groups, sending its shares up about 5 percent.

Cinderella's Castle at Walt Disney World's Magic Kingdom in Florida.
Reinhold Matay

Excluding one-time items, the media and entertainment company earned 63 cents a share on sales of $10.45 billion in its fiscal first quarter, compared with a profit of 49 cents a share on a topline of $9.725 billion last year.

The company was expected to report earnings of 52 cents a share and sales of $10.04 billion, according to an analyst consensus compiled by Thomson Financial.

"It's a great beat, I'm most focused on the attendance level at the theme parks, as well as what their comments will be about business conditions going forward," said Matt Kaufler, portfolio manager at Clover Capital Management.

Shares of Disney leaped more than 5 percent Wednesday, following a 4.5 percent rise that took place in extended trading the evening before.

In early October, Disney shares rose to $35.69 before falling back to $30.68 in late November. The shares rebounded somewhat to close the year above $32.

Disney shares have traded at a ratio of 13.2 times estimated fiscal 2009 earnings, compared with 14.2 times earnings for Time Warner and 13.5 for News Corp.

Disney Earnings Analysis

Disney's media networks business saw a drop in costs as a result of the Writers Guild of America strike, which began about a month into the quarter, but so far no negative impact on ad sales, Chief Financial Officer Tom Staggs told reporters on a conference call.

There was no sign that the U.S. economic downturn had affected consumer products sales or theme park bookings, Staggs said.

"Our bookings are modestly ahead of last year at this point and we are pleased with their performance so far," Staggs said. "Pricing on hotel (rooms) is slightly ahead of last year."

He added that the company will "watch the market and adjust (pricing) if we need to."

Walt Disney said hotel bookings and prices at its theme parks worldwide were running slightly ahead of last year.

Chief Financial Officer Tom Staggs told journalists on a conference call that the company is "really pleased with the pace of business in our parks." He also said Disney would watch the market for signs of slowing and adjust prices if needed.

Disney's media networks operating profit rose 28 percent to $908 million, parks profit rose 25 percent to $505 million, studio income dropped 15 percent to $514 million, but consumer products showed a 38 percent rise in profit to $322 million.

- Reuters contributed to this report.