NEW YORK (CNN/Money) - Walt Disney Co. reported a sharp drop in fiscal third-quarter earnings that met Wall Street expectations for the period, but it warned on current-period results.

Disney (DIS: down $1.77 to $15.06, Research, Estimates) shares dropped nearly 11 percent in afternoon trading on the New York Stock Exchange.

The entertainment conglomerate earned $343 million, or 17 cents a share, excluding special items in the period ended June 30. That was in line with the consensus forecast of analysts surveyed by earnings tracker First Call and down 43 percent from an adjusted $610 million, or 29 cents a share, from the year-earlier period.

Including special items, the company reported net income of $364 million, or 18 cents a share, down from an adjusted $527 million, or 25 cents a share, a year earlier.

The company, which owns broadcaster ABC, cable network ESPN as well as movie studios and theme parks, saw revenue fall about 3 percent to $5.8 billion from just under $6.0 billion a year earlier. That put it below First Call's revenue forecast of $5.9 billion.

Walt Disney said it expects a fourth-quarter profit below the 13 cents a share it earned in the fourth quarter last year, due to a downturn in the travel sector and the economy as a whole. Wall Street expected Disney to earn 16 cents a share in the quarter, according to First Call.

"We're all looking at Disney's numbers and particularly what they said about weakness in the current quarter and its got the investment community spooked about a decline in demand overall," said Bear Stearns analyst Jason Ader.

The company said that bookings at its vacation theme parks are off 10 percent from this period a year earlier, with international bookings down about 30 percent.

"The park component is the key driver requiring us to modify guidance for the fourth quarter," Chief Financial Officer Tom Staggs told investors in a conference call after the earnings release.

President and Chief Operating Officer Robert Iger told CNNfn's Money & Markets that the advertising response to the new ABC season has been good, with upfront advertising 5 percent ahead of where it was a year earlier. ABC has been trailing the other broadcast networks in key ratings demographics in recent seasons.

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"We actually are seeing improvement in the advertising marketplace," he said. "We think we're in good enough shape to take advantage of it."

Staggs said that the company believes it can return to EPS growth in fiscal 2003, and that it should see even stronger EPS growth in fiscal 2004. First Call's forecast for 2003 calls for EPS to rise to 81 cents from current 2002 estimate of 61 cents, and 2004 EPS of $1.14.

Pressed for more detail about future guidance, Staggs said mixed signals from economic indicators and the current budgeting process at the company made it "perilous" to give more detail.

In the third quarter the company saw a better than 15 percent drop in earnings at all its various units, and revenue down at all the units except studio entertainment, which posted a 3 percent gain in revenue. But studio entertainment also posted the biggest decline in operating income -- 66 percent to $22 million, followed by a 40 percent drop in the media networks' operating income to $288 million.

The company said it favors expensing the cost of stock options, which has become a high-profile issue given current concerns about accounting transparency by corporations. But it said it would not do so until a change in accounting rules required all companies to follow the same guidelines. However, it did give more details in a supplemental table that showed third-quarter net income would have fallen 22 percent, or 4 cents a share, to $284 million and 14 cents a share, if the cost of options had been reported.  

--from staff and wire reports