NEW YORK (CNN/Money) -
Walt Disney Co. finished what began as a turbulent fiscal year with a fairy tale ending Thursday, reporting a surge in quarterly profits that edged past forecasts on Wall Street.
Burbank, Calif.-based Disney, the world's No. 2 entertainment company, said net earnings jumped 24 percent to $516 million, or 25 cents a share, in its fiscal fourth quarter ended Sept. 30, from $415 million, or 20 cents a share a year earlier.
Excluding a tax benefit of 6 cents a share, profits were 19 cents a share, a penny above First Call estimates.
Sales rose 8 percent to about $7.5 billion, but fell short of analysts' forecasts of $7.6 billion.
In after-hours trading, Disney (Research) stock rose more than 2 percent after falling 0.7 percent in regular day trading. The stock is up 26 percent after hitting a year low of $20.88 in mid-August.
For the full year, Disney's net income soared 85 percent to $2.3 billion as sales jumped 14 percent to $30 billion. Company officials said Disney is on track to post double-digit earnings growth in fiscal 2005.
"We've had a bright year," CEO Michael Eisner told analysts during a conference call late Thursday. "We are seeing improvement across key financial measures, but we are not where we want to be yet."
Disney, which reported earnings after U.S. stock markets closed, said its media operations, which include the ABC television network, ESPN, and other cable networks, was the primary driver of the hike in quarterly profits.
Quarterly operating income in its media unit was up 50 percent, to $448 million, from the prior year's quarter.
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| Disney shares and the S&P 500 are up year-to-date, while shares of entertainment giants Time Warner and Viacom are down. |
Other bottom-line contributors were its theme parks and consumer products businesses.
Disney's theme parks, which include resorts in Florida and California, posted a 25 percent increase in operating income on a 31 percent increase, to $2.2 billion, in revenues. However, as the company warned earlier, profits at its Florida Walt Disney World resort decreased slightly due the hurricanes that hit the state in August and September.
As for consumer products, which include merchandise licensing and publishing, operating income was up 10 percent, to $618 million.
The only black mark on Disney's income statement came from its film production. Revenues in its movie studio unit fell 14 percent, to $1.9 billion, compared to last year's fourth quarter. Year-over-year, quarterly operating income fell a whopping 88 percent, to $23 million.
The decline resulted from two factors: difficult comparisons to Disney's spectacular 2003 at the box office and a dismal track record in 2004.
Positive signs for Iger?
Despite that studio weakness, analysts said the overall results for the quarter and for the fiscal year that ended Sept. 30 looked good.
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| Eisner scores with 4Q profits |
"Eisner has managed (Disney's finances) well," said Todd Mitchell, an analyst with Blaylock & Partners.
For Disney generally -- and Eisner in particular -- the results were especially gratifying. It was only 9 months ago that Comcast Corp., the country's biggest cable operator, went after its goal of adding content to its distribution channel by mounting a $60 billion hostile takeover of the Mouse House.
The February bid sent Disney's shares to a 52-week high of $28.41. And while Disney was able to fend off Comcast but the battle took a toll on Eisner, who's been criticized by shareholders for Disney's sluggish growth over the last several years and for managing Disney with an iron fist.
Eisner, who gave up the chairman job in March following a shareholder revolt, announced in September that he would step down after two decades at the helm. Disney's board of directors plans to announce a successor by June of next year.
Among the candidates -- and Eisner's first choice -- is Disney president Robert Iger, who long headed ABC before stepping into his current post in 2000.
Iger is not considered a shoo-in for the top job. His prospects have been hurt by his close association with Eisner and past weakness at the ABC network, which Iger ran in the 1990s.
Eisner has just come off of four days of testimony in a Delaware state court trial that, at its heart, is about Eisner's management style and a board of directors that stands accused of kowtowing to Eisner in the mid-1990s, to the detriment of Disney investors.
What is more, ABC, while not directly under Iger's purview, has suffered in recent years from a steep drop in ratings and advertising dollars.
But now ABC has begun to turn itself around. Its campy primetime soap, "Desperate Housewives" is the top-rated new show of the television season, now in its second month. Other hits include "Lost," a drama about airplane crash survivors who are marooned on an uninhabited island, and "Wife Swap," a reality show about mothers who switch families.
Eisner said ABC, which sold most of its commercial air time earlier this year at lower ad rates due to the network's then-dismal ratings, won't see the bottom-line benefits of its ratings rebound until after January.
While cautioning that the network's revival is still early, Eisner told analysts that ABC has a good shot at breaking even in fiscal 2005, possibly even turn a profit.
Disney management said Thursday ABC will reach its goal of breaking-even in 2005 and might even turn a profit.
Mitchell, of Blaylock & Partners, said ABC's newfound success and Disney's sold income statement bode well for the company and for Iger's candidacy.
"Bottom line I think it'll be positive for the stock but, more important, it's positive for Iger in the succession scenario," said Mitchell.
Mitchell said neither he nor Blaylock own Disney shares. Blaylock has an investment banking relationship with Disney.
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