Disney Profit Sinks 6 Percent in Q1, But Results Beat Expectations

Disney Logo - H 2011

Disney Logo - H 2011

UPDATED: Revenue rises 5 percent to $11.34 billion as five of six segments advance.

The Walt Disney Co. reported Tuesday that revenue rose 5 percent to $11.34 billion, though the Studio Entertainment segment lagged, notching a 5 percent revenue decline and 43 percent plunge in operating income.

For the entire company, net income dropped 6 percent to $1.38 billion.

The results beat Wall Street's expectations, sending the stock higher in after-hours trading.

On a per-share basis, Disney earned 77 cents, though excluding certain items it earned 79 cents, down from 80 cents in the same quarter a year ago. Analysts were expecting Disney to earn 76 cents a share in the quarter.

Revenue at the studio was $1.55 billion and operating income was $234 million, a significant decline year-over-year that Disney said is partially due to marketing and distribution costs for Lincoln and Monsters, Inc. 3D.

Also denting the studio's performance was home entertainment, because Cinderella Diamond Release during the most recent quarter didn't measure up to The Lion King Diamond Release a year ago. Also, Brave didn't perform in homes as well as Cars 2 performed a year earlier.

Revenue and operating income at Disney's other five segments advanced. Media Networks revenue rose 7 percent to $5.1 billion, Parks and Resorts was up 7 percent to $3.4 billion, Consumer Products rose 7 percent to $1 billion, and Interactive was up 4 percent to $291 million.

Interactive, a longtime money loser for Disney, reversed an operating loss of $28 million a year ago and turned in operating income of $9 million this time around.

On a conference call with analysts, CEO Robert Iger called the turnaround at the Interactive segment "noteworthy" and said the upcoming video game Disney Infinity is a huge opportunity for the segment.

He also expressed confidence in several upcoming films, including Oz the Great and Powerful, The Lone Ranger and Saving Mr. Banks.

Iger also had kind words for cable channel Disney Junior and praised a few of its hits, like Doc McStuffins, a show about a little girl who cures the ailments suffered by her toys, which come alive when she is alone with them. 

Just prior to the conference call, Iger told CNBC that some "standalone" movies based on the Star Wars saga are in the works. On the call, he said that the notion of such films was first discussed with George Lucas when Disney was considering an acquisition of Lucasfilm.

Iger said, though, that only episodes 7, 8 and 9 "and all the other businesses that flow from those" were factored into the purchase price of Lucasfilm. He said that two standalone films are in the early stages, but he didn't speculate as to how many would ultimately be made.

Disney stock is up 39 percent in the past 12 months. On Tuesday, shares rose 1 percent to $54.29. The stock was up an additional 4 percent in after-hours trading.