Disney Plunges on Earnings

Shares of Disney ($DIS) are getting crushed today on a questionable earnings report.

Shares of Walt Disney Co fell more than 14 percent in early trading Wednesday, a day after the company’s quarterly results failed to reassure investors that Disney could do well in a weak U.S. economy.

Barclays Capital, Wunderlich Securities, RBC and Evercore Partners all cut their price targets for Disney and lowered their expectations for its theme parks and TV networks.

Disney shares were down much more than its peer media companies despite posting solid results, dropping some $10 billion in market value.

Fiscal third-quarter profit was boosted by management’s decision to move some deferred revenue related to ESPN to the third quarter from the fourth quarter.

Excluding deferred revenue, results missed most analysts’ expectations

Disney executives told analysts the company is not seeing any advertiser downturn at its TV networks which include ABC and cable networks like ESPN and Disney branded channels. They also said hotel bookings were down by 2 percent less than it had previously forecast.

The odd thing is that the earnings report initially looked quite good. But once analysts dug through the numbers, they didn’t like what they saw. DIS got as low as $30.20 which is a 13% drop from yesterday’s close. The stock is lower than where it was in November 1997.

Disney was a super-star stock in the 1960s and early 70s. It was one the most prominent of the Nifty 50 fad in the early 70s. Much like the rest of those stocks, Disney plunged hard in the 1973-74 bear market.

The stock really didn’t get moving again until Michael Eisner took over in 1984. The stock soared by more than 42-fold from 1984 to 1998. Since then, the stock hasn’t done well at all.

Posted by on August 10th, 2011 at 11:14 am


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