Disney Stock Drops Along With Outlook

Walt Disney Co. stock tumbled 5.9% over the last two trading days of the week after disappointing box-office results and softer-than-expected theme park attendance led analysts to cut their profit forecasts.

Shares of the entertainment company giant fell $4.44 to $107.56 in heavy volume Friday on the New York Stock Exchange. Disney’s drop helped propel the Dow Jones industrial average lower, accounting for 19 points of the index’s 100.14-point decline.

The cuts in Disney’s profit outlook by three analysts partly reflect weaker-than-expected box-office performances of “The Horse Whisperer” and “Six Days, Seven Nights,” modest gains in attendance at Disney World and softness in sales of consumer products. Disney’s ABC television network also continues to struggle with a sharp decline in its ratings.

“Disney can’t afford to have more than one division under-performing at the same time,” said analyst Barry Hyman at Ehrenkrantz King Nussbaum. “ABC continues to have problems and film just adds to the woes of the company for the short term.”

Analysts Jessica Reif Cohen of Merrill Lynch and Richard Simon of Goldman Sachs & Co.--two of the most-respected media analysts on Wall Street--both cut their fiscal 1998 profit forecasts to $3 from $3.10 a share.

Not all investors are concerned about the cuts, though.

“We don’t think the fundamentals for wanting to own the stock have changed. These are just blips,” said Marvin Roffman, president of Roffman Miller Associates, which owns Disney shares.

It’s the second time in recent months that Simon has lowered his estimate on Disney. He blamed the latest cut on weaker-than-expected Disney World attendance, start-up costs of the Animal Kingdom theme park in Florida, increased write-offs from live-action movies and softness overseas.

But Simon said Disney remains on his “recommended” list.

In cutting her earnings forecast, Reif Cohen said Disney is being hurt by “a difficult international marketplace” and struggling domestic TV operations.

On Thursday, UBS Securities analyst Ed Hatch cut his fiscal 1998 estimate for Disney to $2.96 a share from $3.15 a share, and his 1999 forecast to $3.25 a share from $3.67.