April 19, 1997

Disney’s Second-Quarter Earnings Are Dumbo-Sized

From Wire Reports
 

Walt Disney Co.’s fiscal second-quarter earnings will soar on higher theme park attendance, merchandise tied to “101 Dalmatians” and increased cable-TV ad sales, analysts said.

Earnings will be 46 cents a share for the quarter ended March 31, according to 21 analysts polled by IBES International Inc. The company may restate its year-earlier results, analysts said.

“It’s going to be a very solid quarter. I don’t think anyone will be disappointed,” said analyst Harold Vogel of Cowen & Co. Analysts expect the Burbank, California-based company to report first-quarter earnings as early as Tuesday. Disney shares, which rose 21 percent in the past year, closed Friday up $1 at $76.75.

A Disney spokesman couldn’t be reached for comment.

Operating profit in Disney’s creative content division, which includes filmed entertainment and retail sales, will rise about 30 percent to $340 million, Vogel said.

The division’s profit will be helped by easy comparisons with last year’s quarter, when Disney wrote off $60 million to $70 million for such movie flops as “Mr. Wrong.”

Disney’s video business is also strong, with sales of about 33 million video units of its classic “Bambi” movie, “The Hunchback of Notre Dame” and “Honey, We Shrunk Ourselves,” according to analyst Jill Krutick of Smith Barney Inc.

Retail sales benefited from higher licensing revenue and expansion of the Disney Store franchise. Disney’s retail business benefited from products tied to its hit “101 Dalmatians” and “Toy Story” movies.

Disney’s operating profit from theme parks is expected to rise about 14 percent to $230 million, boosted by a strong economy that lured more tourists to its Walt Disney World resort in Florida. Attendance at Disneyland in California was flat, analysts said.

Disney “continued squeezing costs in the theme park business so that the margins stayed very solid,” said analyst Arthur Rockwell of Yaeger Capital Markets.

Broadcasting’s operating profit will rise about 19 percent to $230 million, led by ESPN and the Disney Channel, Krutick said in a recent report.

Operating profit at the two channels will jump about 18 percent “as international venture investments rise and the Disney Channel’s programming facelift is underway,” she said.

The unit also will be helped by programming cost writedowns related to Disney’s $19 billion acquisition of Capital Cities/ABC Inc. last year.

ABC, mired in third-place among the major television broadcast networks, is the main drag on the division’s earnings, analysts said.

Some of Disney’s publishing assets will probably be listed as discontinued items for the quarter, Vogel said. Disney announced the sale of four newspapers to Knight-Ridder Inc. on April 4.

Some of the stocks that moved substantiallyor traded heavily Friday:

NYSE

Silicon Graphics, down $4.12-1/2 at $12.87-1/2.

The computer maker late Thursday reported lower-than-expected earnings for its third fiscal quarter. The company, based in Mountain View, Calif., attributed the decline to new computer line problems.

Hershey Foods, up $1.50 at $52.87-1/2.

The Hershey, Pa.-based consumer foods maker earned 45 cents a share in the first quarter.

NASDAQ

Desktop Data, down $5.75 at $6.

The Burlington, Mass.-based provider of real-time news and information services late Thursday said it expects revenue growth for 1997 to be below year-ago levels.

SDL, down $5.25 at $10.

The maker of semiconductor chip lasers late Thursday reported first-quarter profits fell 76 percent from a year ago.


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