Disney Misses on Both Sides

Walt Disney Co. (DIS) reported fiscal 2nd quarter earnings after the bell today. The entertainment behemoth posted a horror flick on earnings — a negative surprise of 14.3% — and a serious drama on the revenue side.

Disney’s 49 cents per share in the quarter was well below the Zacks Consensus Estimate of 57 cents. The company made $9.08 billion in revenue, down a bit from the expected $9.13 billion. Disney’s Q2 earnings made a penny more than the year-ago quarter, and revenues are up 5.9% from $8.58 billion a year ago.

Studios and Parks & Resorts is where the main concerns were coming into the earnings report, and they proved to be where the quarterly weakness existed. The Japanese earthquake and tsunami helped the Parks group fall 7% in the quarter, and the box office flop “Mars Needs Moms” assisted a disappointing quarter for Disney’s film studios, which were down 13%.

Analysts had been modestly optimistic ahead of the earnings report after the bell for the fiscal 2nd quarter. Three of 21 estimates had been upwardly revised in the past month. Looking to fiscal years 2011 and 2012, analysts have far more optimistic — fiscal 2011 EPS of $2.64 expected is up 20 cents over the past 90 days, and fiscal 2012 has seen 5 upward revisions in the past month.

Looking ahead, several questions remain for Disney: Will the Japanese situation have a lingering negative affect on Parks & Resorts in the company’s 3rd quarter? Will high oil prices keep consumers away from the parks this spring/summer? How much of a negative affect on Disney-owned ESPN would an NFL lock-out this fall have?

Finally, the Studios are planning a big blockbuster year for summer movies. But will “Thor,” “Cars 2” and “Pirates of the Caribbean 4” stage a comeback for the Studios next quarter, or will one or more of these films also bring in weaker-than-expected box office receipts?

DISNEY WALT (DIS): Free Stock Analysis Report

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