Marvel's earnings fall, but forecast brightens

With no new self-financed movies on the 2009 schedule, Marvel Entertainment reported a sharp drop in earnings last quarter but still came in ahead of expectations and issued a more confident forecast for the full year.

Net income fell to $29 million for the second quarter, down 38% from the same period a year earlier, while revenue was down 26% to $116.3 million. Most of the drop came from a sharp decline in the licensing segment, which last year was flush from products tied into the company's "Iron Man" and "Incredible Hulk" movies. Total licensing revenue plunged 45% to $51.8 million but was, Marvel said, higher than anticipated.

Fox's "X-Men Origins: Wolverine," based on the Marvel comic book character and released in May, sold $363.1 million worth of tickets worldwide. But Marvel didn't receive a cut of the ticket revenue. The relatively small amount of money it receives from licensing characters to motion picture studios, the company said, led to its 2005 decision to produce movies such as last year's "Iron Man" itself.

Revenue directly attributable to movie production rose 13% to $32.8 million, based primarily on income from the domestic pay TV run and continued DVD sales for "Iron Man."

Marvel's comic book and graphic novel publishing division revenue was virtually flat from last year, at $31.7 million. But operating income fell 7% to $10.9 million, reflecting a drop in higher margin advertising.

Marvel recently completed photography on "Iron Man 2," to be released next May, and has a new licensed series called "The Super Hero Squad Show," based on Marvel characters, that will debut on Cartoon Network next month.

The company expressed stronger confidence in its full-year performance, raising the low ends of its predicted ranges for revenue and net income. It now expects between $465 million and $485 million in revenue and between $95 million and $105 million in net income. The previous low ends were $450 million and $86 million, respectively.

Marvel didn't raise the top ends of its forecasts, however, citing the economic downturn.


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