The tremor of the Japanese earthquake and tsunami reached the coasts of the U.S. as The Walt Disney Company (DIS) discontinued its organizational operations in Japan, Bloomberg reported.
The company suspended its theme park and Tokyo DisneySea operations as a safety measure taken to protect its employees and their families.
Though it is unkind to worry about the revenue losses in the middle of catastrophic human affliction, it does incite a need to assess the impact of the temporary closures on the balance sheet of the company.
Japan’s Disneyland is an integral part of the Disney’s parks & resorts segment as it derives a healthy amount of profit in the form of royalty as per the licensing conformity between Disney and OLC group of Japan. Thus, the amount of revenue loss is expected to be high and is likely to weigh upon the financial results of the company.
In a separate story, the company announced the appointment of Mark L. Walker as the senior vice president of Disney.com in the Disney Interactive Media Group (DIMG). Walker, the ex-head of the Yahoo! News and Information properties, will report to James Pitaro, Co-President, DIMG.
Walker, who has enormous proficiency in the online market, will supervise product promotion, programming and functions of Disney’s websites. Moreover, the new vice president is a boon for the company as he is also well versed in spotting new business opportunities and adding different revenue streams to the company.
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 Walt Disney, ABC, ESPN, Marvel Entertainment, and Touchstone Pictures, which provides it a strong competitive advantage and strengthens its position in the market against key players like News Corporation (NWS) and Time Warner Inc. (TWX).
Disney offloaded Miramax Film Studio to concentrate on the development of motion pictures under its other brands, such as Disney, Pixar and Marvel, the characters of which can be used for the development of video games. Miramax does not produce such type of films.
Disney intends to increase its investments in the video games industry, which has been generating higher sales compared to box-office sales in the United States. This is quite evident from the company’s acquisition of Tapulous, a software and video game developer and Playdom, one of the biggest makers of social games on the internet.
Followed by a broad evaluation, we prefer to maintain a long-term ‘Outperform’ recommendation on the stock. Disney also holds a Zacks #1 Rank, which translates into a short-term ‘Strong Buy’ rating.
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