News > Companies
Disney 1Q net profit falls
But media company says revenue jumps 6%; income excluding charges tops estimates.
January 30, 2003: 6:24 PM EST

NEW YORK (CNN/Money) - Walt Disney Co. said Thursday that first-quarter profits fell 42 percent as the No. 2 media company took a multimillion-dollar write-down related to aircraft leased to bankrupt United Airlines.

But Disney's overall sales rose and operating profit topped Wall Street forecasts as the theme-park business rebounded from the travel standstill that followed Sept. 11, 2001.

Weakness in movies such as "Treasure Planet" and "The Hot Chick" hurt Disney's movie division, which still enjoyed success with "Sweet Home Alabama" and "Signs," Disney said.

Disney, which released results after the closing bell, said it can grow operating profits this year and next. Its shares rose 55 cents, or 3.4 percent, to $16.90 in after-hours trading after falling 20 percent in 2002.

"We still have a number of challenges ahead of us, but we remain convinced of the extraordinary potential of our businesses," Disney CEO Michael Eisner said in a statement.

Disney's net income for the three months ended Dec. 31 fell to $256 million, or 13 cents per share, from $438 million, or 21 cents per share, a year earlier. Revenue in the quarter increased 6 percent to $7.5 billion.

Burbank, Calif.-based Disney, which runs ABC and ESPN, operates Disney World and Disneyland, and controls several movie studios, took a charge of $83 million, or 4 cents per share, in the first quarter to write off the aircraft leases with United.

Excluding that one-time item, Disney (DIS: Research, Estimates) reported a first-quarter profit of 17 cents per share, topping the 15 cents that analysts surveyed by earnings tracker First Call were expecting. Disney earned 15 cents in the year-ago quarter when gains from the sale of shares of Knight-Ridder Inc. are excluded.

Looking ahead, Eisner said the company continues to target earnings-per-share growth of 25 percent to 35 percent this year and next.

First-quarter revenue at Disney's media unit, which includes ABC and ESPN, rose 9 percent to $3.2 billion even as operating income slipped 7 percent to $225 million.

ABC, which last week televised the Super Bowl and has rights to air the National Basketball Association games this season, enjoyed success with the reality show "The Bachelor."

In a conference call with analysts, Robert Iger, Disney's chief operating officer, said the network plans six more reality shows this year.

Revenue at the parks and resorts division rose 8 percent to $1.5 billion and operating profits rose 20 percent to $225 million. Disney is opening a theme park in Hong Kong that Eisner said "will be a beachhead on the continent."

Still, a war with Iraq, by deterring travel, could hurt theme park attendance, something Eisner alluded to. "We believe people are laying low and waiting to see what happens," he said.

Disney's movie studio division saw a revenue gain of 7 percent to $1.9 billion. But the division's operating income fell 7 percent to $138 million.

Eisner also said that Disney's board, which has been criticized for not being independent enough, has been cut to 13 members from 17.

As for its net profit, Disney, which bought aircraft and then leased them to airlines, is only the latest company to feel the fallout from United Airlines, which last year filed the biggest bankruptcy in airline history.

Bank of New York Co. has said it would have to put aside $390 million in provisions and take a $240 million charge mostly to cover aircraft lease losses and its exposure to United, which is run by UAL Corp. (UAL: Research, Estimates). And Pitney Bowes Inc. has said it will take a fourth-quarter pre-tax charge of approximately $100 million, or 26 cents a diluted share, to write down its investments in leases with United and US Airways Group Inc., which is also operating under bankruptcy protection.  Top of page

  More on NEWS
Anheuser-Busch orders 800 hydrogen-powered semi trucks from Tesla rival Nikola
H&M and Zara ditch mohair wool after animal cruelty expose
US and China kick off talks to avoid a trade war
GE's latest sale: Its 111-year-old rail business
Dow soars as US-China trade tensions cool
After CNN report, lawmakers want answers from Uber, Lyft on sexual assaults

graphic graphic