On the heels of scrapping its expensive foray into the Internet-portal space,
The Walt Disney Co. reported a second-quarter loss of $567 million, or 26 cents
per share, mainly from a $1 billion charge for shuttering its GO.com Web site.
Despite the poor performance -- the company reported a profit of $77 million,
or 8 cents per share, in the same period last year -- Disney exceeded analysts'
Disney, which closed its GO.com portal last month, reported a revenue decline
of 4 percent to $6 billion in the quarter. Operating income rose 14 percent to
Earnings -- excluding a $1 billion charge for the restructuring of GO.com --
were $391 million, or 19 cents per share, compared with $294 million (14 cents)
in the same period last year.
The analysts' consensus estimate for Disney, minus the special charges, was
about 13 cents per share.
Disney's share price fell by $1.45, to $28.58 apiece, after its earnings were
released Tuesday. But it regained much of that ground in afternoon trading
Wednesday, rising $1.25 to $29.83.
The sinking advertising market appeared to be the main driver for the
declines. But Disney chairman Michael Eisner said he expects a rebound.
'Of course, economic downturns are never good news, but historically, our
company has always emerged from them stronger than ever,' Eisner said in a
prepared statement. 'With this in mind, we remain confident in meeting or
exceeding our fiscal goals for this year and about the long-term prospects for
The Walt Disney Co.'
Disney's Media Networks division was hit hardest, with revenue falling 8
percent and cash flow declining 9 percent despite strong growth at the cable
Broadcast properties -- mainly the ABC television network and its
owned-and-operated broadcast-television and radio stations -- led the
Broadcast revenue fell 15 percent in the period to $1.4 billion while
operating income dropped 30 percent to $174 million.
At the cable networks, including Disney Channel and ESPN, the picture was
brighter. Revenue rose 8 percent to $801 million and operating cash flow rose 9
percent to $319 million.