Disney Results Top Forecasts as Ad Market Recovers and Reuters

Walt Disneyreported sales and a profit that both topped what analysts were expecting, as a recovering advertising market boosted its media operations and offset flat revenues at its parks and studio division.

Cinderella's Castle

The media and entertainment conglomerate reported that it earned 47 cents a share in its fiscal first quarter, excluding one-time items, compared with 41 cents a share a year earlier.

Revenue jumped to $9.74 billion, up from $9.6 billion a year before.

A group of analysts polled by Thomson Reuters forecast earnings on average of 38 cents a share on $9.646 billion in revenue for Disney.

Shares of Disney, a component of the Dow Jones Industrial Average, traded both above and below their close in volatile trading Tuesday. Get after-hour quotes for Walt Disney here.

The stock finished 1.32 percent higher at $29.87 on the New York Stock Exchange Tuesday. 

Net income in the fiscal first quarter ended Jan 2, 2010 was $844 million or 44 cents per share, down from $845 million or 45 cents a share, in the year-ago first quarter.

The strongest performance came from Disney's media network division, the largest in terms of revenue and profit and home to its lucrative cable networks. Sales from the division rose 7 percent to $4.2 billion, driven by increases at Disney Channels and ESPN.

Drilling Down On Disney

But analysts said the biggest surprise came from its studio, which is currently being overhauled. Sales were essentially flat at $1.9 billion and segment operating income rose 30 percent to $243 million.

One key was cost-cutting. That helped take the sting out of films as "Old Dogs," "Princess and the Frog" and "A Christmas Carol," which failed to be blockbuster hits.

"The material thing is the studio was much better than we thought," said Oppenheimer Analyst Jason Helfstein. "Basically, everything was better than the Street, but for us the big surprise was the studio."

The results at Disney follow on the heels of better-than-expected profits at News Corp and Time Warner .