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Go.com Losses Reduce Disney Profit 37%

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TIMES STAFF WRITER

Walt Disney Co.’s Go.com Internet unit fared better than expected in its first quarterly earnings report, but its losses reduced Disney’s quarterly profit 37%.

Go.com--which operates a Web portal, popular sites such as ESPN.com and ABCNews.com, and a direct marketing catalog operation--took in $126 million in the last three months of 1999 on a pro forma basis, up 13% from the previous year. Nearly 60% of that revenue came from online advertising and electronic commerce, with the balance coming from Disney’s direct marketing catalog operation. Internet revenue increased 47% over the last three months of 1998, the company said Wednesday.

But Go.com’s pro forma net loss during the quarter reached $265 million, about 14% higher than the year-earlier period. Because Disney has a 72% retained interest in Go.com, the portion of the loss attributed to Go.com shareholders was $74 million. Excluding amortization, the unit lost 30 cents per share, less than the 47-cent average estimate of analysts polled by First Call/Thomson Financial.

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Disney Chief Financial Officer Thomas Staggs warned analysts that Go.com’s operating losses are “likely to continue for some time,” but he added that Disney is “building this business to make money, and we are pushing for profits as soon as is prudent.”

Internet analyst Arthur Newman of Schroder Securities in New York said Go.com might be profitable “at some point in 2001.”

As expected, Disney said it earned $1.1 billion in operating profit for the quarter ended Dec. 31 on revenue of $6.8 billion. Net income for the quarter was $324 million, or 16 cents per share, up 3% from the last three months of 1998. Excluding Go.com’s performance, Disney’s net income would have been $515 million for the quarter.

On the New York Stock Exchange, shares of Burbank-based Disney closed up 13 cents at $37.69, and the Go.com tracking stock lost $1 to close at $28.

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