Disney’s Earnings Rise, Beat Forecasts

Walt Disney Co. executives chose a resort called the Yacht & Beach Club on Monday to paint a sunny profit picture for Wall Street.

With analysts and investors gathered inside the Walt Disney World hotel, Disney executives announced that the company not only beat forecasts with a surprisingly strong 5% increase in fiscal first-quarter profit but also remained on track to deliver double-digit growth for the year.

All told, Disney earned $723 million, or 35 cents a share, in the fiscal first quarter that ended Dec. 31, thanks largely to gains in its cable networks and theme parks. The results compared with $688 million, or 33 cents, a year earlier. Revenue increased 1.4% to $8.67 billion.

“It is very gratifying to see the company’s strong performance continue into the new fiscal year,” Chief Executive Michael Eisner said.

Disney’s quarterly numbers had been expected to fall short, in part because of difficult comparisons with the 2003 quarter, which included DVD sales from the hits “Finding Nemo” and “Pirates of the Caribbean.”

Instead, Disney easily beat the 29-cents-a-share consensus of analysts surveyed by Thomson First Call.

“The numbers are great,” said Merrill Lynch media analyst Jessica Reif Cohen after listening to a nearly hourlong presentation in the Grand Harbor Ballroom by Disney’s chief financial officer, Tom Staggs. “Clearly, things are going in their favor right now.”

The earnings news helped kick-start the two-day conference on a high note, in stark contrast to a year earlier.

At that meeting, Disney’s thunder was stolen when cable giant Comcast Corp. launched a $54-billion unsolicited bid. Disney at the time also was facing a rebellion from shareholders who complained about lackluster long-term performance and a weak stock price.

This year, Disney is enjoying a much improved outlook. The company’s theme parks chief, Jay Rasulo, told analysts that there should be a big lift this year from an 18-month-long companywide celebration of Disneyland’s 50th anniversary.

In Disney’s first quarter, the biggest winner was its media division, at which operating income rose 36% to $467 million. Gains at ESPN and improved ratings at the ABC Family Channel were largely responsible.

The shows that have led a turnaround at the ABC TV network -- “Lost” and “Desperate Housewives” -- didn’t boost the bottom line. Disney sold the bulk of its advertising for television in May, well before the shows emerged as breakout hits.

Parks and resorts, which include Walt Disney World in Florida and Disneyland in California, also had a good quarter, with operating income rising 11% to $258 million. The parks benefited from higher Disney World attendance and higher ticket prices at Disneyland.

Disney’s film studio unit saw its income fall 27% to $333 million despite strong box-office sales from “National Treasure” and Pixar Animation Studios’ “The Incredibles” because it lacked the DVD hits of a year earlier. Meanwhile, operating income at Disney’s consumer products unit, which includes products licensed to retailers, fell 2.5% to $231 million.

Disney shares rose 40 cents to $28.63 on the New York Stock Exchange.