Disney Says It’s Poised to Revive

In his annual letter to shareholders, Walt Disney Co. Chief Executive Michael Eisner acknowledged the company’s poor stock performance and said Disney is poised for a recovery when the economy recovers, although he did not set any growth targets for this year.

“We are now officially in recession and people have less disposable income for travel,” Eisner wrote in a letter that was decidedly less chatty and more somber in tone than previous communications. “However, when the economy does bounce back there is every reason to believe that the performance at our parks will be stronger than ever.”

Since Sept. 11, attendance has fallen off dramatically at Disney theme parks, particularly in Orlando, Fla., where attendance has been down about 25% over last year. The terrorist attacks also worsened a weak television advertising market at the Disney-owned ABC network.

Disney’s stock, which fell 28% last year, is trading close to where it was five years ago.

To turn the company around, Disney has been paring costs companywide, Eisner said. Disney cut 4,000 jobs last year and started new purchasing policies that will save $200 million annually. Disney Studios also has reduced its investment in live action films by $600 million, Eisner said.

Disney, which has closed 51 Disney retail stores, will shut down 50 more over the next two to three years, reducing the number of U.S. stores to between 300 and 400, Eisner said.

Spencer Wang, an analyst with ABN Amro, on Thursday upgraded his rating on Disney to a “buy” from a “hold,” predicting an upturn in the company’s struggling theme park and broadcasting business by 2003.

But other analysts note that Disney’s woes aren’t all economy-related. “The ratings at ABC leave a lot to be desired and unfortunately that’s not a quick turnaround process,” said Katherine Styponias of Prudential Securities.

Eisner said he expects Disney’s stripped-down Internet business will be profitable by the end of the fiscal year.

The company is now focusing on its individual entertainment, news and sports Web sites, such as ABC.com and ESPN.com and Disney.com.

Disney shares closed up 67 cents at $22.12 on Thursday on the New York Stock Exchange.