Disney Beats Street, Stock Gets a Pop

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Shares in The Walt Disney Co. rose more than 5 percent last Tuesday, after the entertainment giant beat Wall Street estimates for fiscal first-quarter earnings.

Disney stock reached $32.10 each on Feb. 6-up $1.67 each-before retreating to close at $31.52, up $1.09 per share.

Disney finished the quarter with earnings of 16 cents per share-a penny better than the Wall Street consensus estimate-on revenue of $7.3 billion, up 7 percent. Operating income increased in the period to $1.3 billion, a 12- percent increase.

Excluding losses and one-time charges associated with restructuring its Walt Disney Internet Group, earnings would have been 28 cents per share for the period.

Earlier this month, Disney said it would shutter its Go.com Internet portal and convert all the outstanding shares in the Internet group into Disney shares.

"Looking forward, we believe that our recent move to focus on our core Internet holdings will help us maintain the growth of Disney's bottom line," Disney chairman Michael Eisner said in a prepared statement.

Fueling the growth were increases at its theme parks, for which revenue was up 6 percent, and its studio entertainment operations, which reversed a $45 million operating loss into a $152 million gain. Disney geared up to open its latest park-California Adventure in Anaheim, Calif.-by inviting Wall Street analysts in for a day-long briefing last Tuesday.

At its cable networks-which include the Disney Channel and ESPN-revenue was up 14 percent, to $1.2 billion, while operating income declined 5 percent, to $281 million, due to a soft advertising market, higher programming costs at ESPN and start-up costs at SoapNet.

Disney chief financial officer Thomas Staggs said in a prerecorded conference call that although the company experienced some softening in advertising revenue during the quarter, there are indications that the ad market is "firming up."

And the company feels its cable networks are particularly immune to adverse economic factors, he added.

"We believe our cable businesses are generally more resistant to an advertising downturn than most other cable programming networks," Staggs said.

Disney also saw substantial gains in its investments in cable networks Arts & Entertainment, E! Entertainment Television, Lifetime and The History Channel. According to its financial statements, operating income from those investments was up 23 percent in the quarter, to $185 million.