The Walt Disney Company (DIS) recently posted first-quarter 2011 results that beat the Zacks Consensus. The quarterly earnings of 68 cents a share outpaced the Zacks Consensus Estimate of 56 cents, and surged 45% from 47 cents earned in the prior-year quarter.
The increase in the bottom line was powered by growth across Media Networks, Studio Entertainment, Parks and Resorts and Consumer Products. Following the better-than-expected results a positve sentiment may be palpable among the analysts and we could witness a rise in the Zacks Consenus Estimates.
Total revenue in the quarter jumped by 10% to $10,716 million from the year-ago quarter, and also outdid the Zacks Consensus Estimate of $10,505 million. Total segment operating income soared 40% to $2,208 million.
Behind the Headline
Media Networks revenue rose 11% year over year to $4,645 million due to revenue increase across Cable Networks (up 16%) and Broadcasting (up 4%). Segment operating income surged 47% to $1,066 million. Cable Networks’ operating income jumped 42% to $771 million driven by growth across ESPN and the Disney Channels, and increase in equity income. Operating income at Broadcasting soared 64% to $295 million, reflecting a rise in advertising revenue at owned television stations, fall in sports programming costs and increase in net affiliate fees.
Parks and Resorts revenue climbed 8% to $2,868 million. Segment operating income rose 25% to $468 million due to a rise guest spending, attendance and hotel occupancy partly offset by higher costs.
Studio Entertainment revenue came in at $1,932 million down from $1,935 million posted in the year-ago quarter, but operating income grew substantially by 54% to $375 million. The growth reflects rise in worldwide home entertainment and lower film cost write-downs.
Consumer Products revenue climbed 24% to $922 million and segment operating income surged 28% to $312 million, reflecting increased licensing revenue on the heels of Toy Story and Marvel merchandise, and improved performance at Disney Stores North America.
Interactive Media revenue for the quarter surged 58% to $349 million, but posted an operating loss of $13 million compared with a loss of $10 million in the prior-year quarter. The increase in video games sales was more than offset by incorporating the results for Playdom in the quarter, reflecting the impact of acquisition accounting.
Other Financial Details
During the quarter, Disney generated negative free cash flows of $94 million. The company ended the quarter with cash and cash equivalents of $3,039 million, total borrowings of $12,755 million and shareholders’ equity of $37,797 million, excluding a non-controlling interest of $1,942 million. Capital expenditures in the quarter were $1,213 million.
Walt Disney is one of the world’s leading diversified entertainment companies. Moreover, the company commands a formidable portfolio of globally recognized brands, such as the namesake brand Walt Disney, ABC, ESPN, and Marvel Entertainment.
These renowned brands offer a strong competitive edge to the company and bolsters its well-established position in the market against major players like News Corporation (NWSA) and Time Warner Inc. (TWX).
Currently, we have a long-term Neutral rating on the stock. Moreover, Disney holds a Zacks #3 Rank, which translates into a short-term Hold rating.
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