Disney's Quarterly Earnings Are a Mixed Bag

Disney Logo - H 2011

Disney Logo - H 2011

UPDATED: The media conglomerate beats the expectations of Wall Street analysts by posting a record profit in its fiscal third quarter, though it slightly misses their revenue expectations.

The Walt Disney Co. on Tuesday reported a quarterly 31 percent surge in earnings per share to $1.01 on revenue that rose 4 percent to $11.1 billion. Disney's net income attributable to the company rose 24 percent to $1.8 billion.

Disney doesn't offer guidance, but the per-share profit results bested the expectations of Wall Street analysts by a wide margin. Revenue, though, fell about $200 million short of their expectations.

Disney's improved results in its fiscal third quarter are owed in part to rising sales at its theme parks, resorts and cruise ships as well as a $1.5 billion worldwide box-office haul for the Marvel movie, The Avengers. Also contributing was Pixar's Brave, which has taken in $342 million worldwide.

Still, the company's Studio Entertainment unit posted anemic growth year-over-year, logging $1.625 billion as opposed to $1.620 billion, the problem being declining sales in worldwide home entertainment. 

Operating income for Studio Entertainment, though, surged to $313 million from just $49 million a year ago.

Overall at Disney, analysts were predicting a 19 percent rise in per-share profit to 93 cents and a 6 percent increase in revenue to $11.3 billion.

"We had a phenomenal third quarter, delivering the largest quarterly earnings in the history of our company," said CEO Robert Iger.

Iger, in fact, took exception to reports that focused on Wall Street revenue expectations.  During an interview with the Fox Business Network set to air on Wednesday, for example, he addresses what he calls a "so-called revenue miss." Later, Iger sent the following statement to The Hollywood Reporter:

"Not only are our third quarter earnings the highest in the history of the company, but every one of our businesses is up in terms of the bottom line from last year. Any perceived 'revenue miss' is an error of estimates by people who do not have the ability to see or estimate what our revenue is going to be as certainly or accurately as we do. Those estimates have no real bearing on how we manage the company or the high quality of today's results."

Disney shares closed 16 cents higher on Tuesday to $49.81 but sunk about 1 percent during the after-hours session once the results were released.

Among Disney's five segments, the only one posting declining year-over-year sales was Interactive, which recorded a 22 percent drop in revenue to $196 million, though its operating loss improved to $42 million from $86 million in the year-ago quarter.

Media Networks posted a 3 percent rise in revenue to $5.1 billion and a 2 percent rise in operating income to $2.1 billion.

Parks and Resorts logged a 9 percent revenue bump to $3.4 billion and a 21 percent leap in operating income to $630 million.

Consumer Products posted an 8 percent climb in revenue to $742 million and a 35 percent surge in operating income to $209 million, largely because the unit shared less of its revenue with the film studio and because sales rose significantly in Japan, where an earthquake and tsunami hampered sales a year ago.

During a conference call with analysts, Iger disclosed that Marvel recently closed an exclusive deal with Avengers director and screenplay writer Joss Whedon to write and direct its sequel.

Iger noted that Avengers is the third biggest movie of all time and said Disney plans to "leverage the power of The Avengers across the company."

Iger called Disney Channel's Phineas and Ferb "a mammoth success" and said Cars Land and other improvements make Disney California Adventure an "exceptional" experience and the "perfect neighbor to Disneyland."

Email: Paul.Bond@thr.com