Disney reports largest quarterly earnings in its history

[GoofGoof]

I think they have too many MBAs in the C-suite.

I think another problem may be the current Board of Directors...too many of them don't see big picture and just look at day to day stock prices. I think their influence then infects the rest of the Disney management.

My advice would be to do a round of executive level firings and get rid of most of the Ivy League MBAs they have on staff. For the last few decades, the same schools have been churning out MBA graduates who get into group-think because they were taught by the same professors who really don't know what they are doing. Get some new blood in there from different schools and promote to the C-suite people from more creative disciplines so that those in the "let's reduce costs as much as possible today" school of thought are mitigated by more "big picture" types.

The whole company was started by people who barely went to college and who were artists at heart. A little more of them and fewer Harvard MBAs would do Disney a world of good.

Disney's board of directors. Not all Harvard MBAs. Actually pretty diverse for a large corporation:

Robert Iger CEO - BS Ithica College
John Skipper - President ESPN - BS English Literature U of N.C.
George Bodenheimer - BA Economics Denison University
Ivan Tarvin - Moscow State University of International Relations
Allen Horn - MBA Harvard
Aylwin Lewis - University of Houston
Fred Langhammer - no education listed
Orin Smith - MBA Harvard
Judith Estrin - MS Electrical Engineering Stanford
Monica Lozano - studied political science at U. Of Oregon, no degree
Robert Matschullat - BS Sociology Stanford
John Chen - MS Electrical Engineering CA Institute of Technology
Susan Arnold - MBA University of Pittsburgh
Sheryl Sandberg - MBA Harvard

 

[GoofGoof]

My husband and I have never owned any stock in any company so I don't really know how it works. When you say that it went past $50 per share, what does that mean to an individual?

Say you own 100 shares of stock in Disney. That would mean you own $5,000 worth of stock in Disney in my understanding if it's $50 per share that day. I understand this part of stocks, that if you would sell your 100 shares at the $50 price you'd get $5,000 more or less (not including the taxes and the broker fees).

I also know that stocks pay dividends, but I don't know how much that would be. Using the 100 shares as an example, do you get paid dividends every quarter or is it yearly?

Can someone explain how much you'd get in dividends with 100 shares of Disney stock if it's at $50/share?

Disney's current dividend is $0.60 per share so each quarter you would get $0.15 for every share owned. At a $50 stock price the $0.60 dividend is a 1.2% dividend yield. Think of that almost like putting your money in the bank and getting an interest rate of 1.2%. You also get to participate in the upside (or downside) of price movements. Stable non-growth stocks like utilities have dividend yields in the 4% to 5% range. Growth companies tend to not pay dividends at all. They invest their free cash flow back into their business to grow it. People buy the stock just to ride the growth.

Disney has 1.79 billion shares outstanding so if they pay a dividend of $0.60 per share per year that adds up to just north of $1billion returned to shareholders each year.

 

[Jimmy Thick]

Sure, they should make all the money they can. Absolutely.

But, I adamantly insist that they should not boost profits by cutting quality or raising prices without adding benefit. For the bulk do Disney's history, they made quite a profit by giving more, not by cutting more.

Disney's history goes back a long, long time. Simpler times. We don't live in those times anymore. If Walt were alive and in charge, he would have destroyed the company by now of gotten removed like Eisner, those thoughts don't wash anymore, not to be successful in business.

A billion dollars bought you a whole theme park in 1982, you can get a nice little themed area with that amount now.


Jimmy Thick- Bring me back 1955 prices anyday...

 

[El Grupo]

Disney's history goes back a long, long time. Simpler times. We don't live in those times anymore. If Walt were alive and in charge, he would have destroyed the company by now of gotten removed like Eisner, those thoughts don't wash anymore, not to be successful in business.

A billion dollars bought you a whole theme park in 1982, you can get a nice little themed area with that amount now.


Jimmy Thick- Bring me back 1955 prices anyday...

So, other divisions boosted profits by essentially following Walt's strategy of expanding, taking risks and continually upgrading their properties. And their efforts led to record profits. But, Walt would have been ousted?

Only by executives that subscribed to the same philosophy as TDO, the ones who now are apparently scrambling to fix their mistakes.

 

[GoofGoof]

So, other divisions boosted profits by essentially following Walt's strategy of expanding, taking risks and continually upgrading their properties. And their efforts led to record profits. But, Walt would have been ousted?

Only by executives that subscribed to the same philosophy as TDO, the ones who now are apparently scrambling to fix their mistakes.

What evidence is there that WDW profits are down? The way they disclose the info there is no way to tell how much of the profits come from which part of the parks division.

 

[danlb_2000]

I have to ask, why can't Disney make as much money as possible? As a shareholder myself, and a substantial one at that, I DEMAND a return on my investment. If it means raising prices at the theme parks, then so be it, people will continue to pay a higher price or they won't be able to experience the one of a kind thrill Disney World, or any Disney park offers. The doom and gloomers can complain all they want, the bottom line for Disney is not how many E-Tickets they build in California or Orlando, its how the stock, my stock is perceived.


Jimmy Thick- Dreaming of electric sheep...

This is bad for Disney and the shareholders, because IMHO, it's a situation of diminishing returns. You can't keep raising prices beyond the rate of inflation and expect that everyone will keep paying them. Eventually you are going to start loosing customers, and if you start loosing them faster then your price increases make up for you have a problem. I just don't see it as a sustainable way of increasing profits. On the other hand, bringing new guests or bringing them in more often is much more sustainable. The only way or do that is to keep improving your product.

 

[El Grupo]

What evidence is there that WDW profits are down? The way they disclose the info there is no way to tell how much of the profits come from which part of the parks division.

True. But, I didn't say their profits were down. Though, from spending several years in Disney management, I can say with much confidence that, if a division is performing well, they are quickly touted in the quarterly updates.

What I did ask is would Walt have been ousted because he continued to utilize the strategy that helped most of the divisions perform well last quarter?

 

[GoofGoof]

I misunderstood. I have seen a lot of people on here posting that Disney had a good quarter despite WDW and I wasn't sure how you could reach that conclusion without a breakdown by resort.

To answer your actual question, Walt would most likely not be ousted. It would be like ousting Jobs from Apple or Gates from Microsoft. He would definitely not have as much control as he had in the beginning since he would have to answer to the board and shareholders. If he attempted to spend money on projects that couldn't meet ROI thresholds he would get push back. Truthfully i have no clue what Walt would do today. It's hard to take someone from another period in history and try to figure out how they would fit in today. JFK would probably have been impeached If he and Clinton switched places in time. The world Walt lived in was so different than ours today.

 

[El Grupo]

I misunderstood. I have seen a lot of people on here posting that Disney had a good quarter despite WDW and I wasn't sure how you could reach that conclusion without a breakdown by resort.

To answer your actual question, Walt would most likely not be ousted. It would be like ousting Jobs from Apple or Gates from Microsoft. He would definitely not have as much control as he had in the beginning since he would have to answer to the board and shareholders. If he attempted to spend money on projects that couldn't meet ROI thresholds he would get push back. Truthfully i have no clue what Walt would do today. It's hard to take someone from another period in history and try to figure out how they would fit in today. JFK would probably have been impeached If he and Clinton switched places in time. The world Walt lived in was so different than ours today.

Very fair points. Easy to speculate, but impossible to know how anyone from a previous era would perform or be accepted today.

 

[ParentsOf4]

I have to ask, why can't Disney make as much money as possible? As a shareholder myself, and a substantial one at that, I DEMAND a return on my investment. If it means raising prices at the theme parks, then so be it, people will continue to pay a higher price or they won't be able to experience the one of a kind thrill Disney World, or any Disney park offers. The doom and gloomers can complain all they want, the bottom line for Disney is not how many E-Tickets they build in California or Orlando, its how the stock, my stock is perceived.

I don't think the issue is with Disney as a whole. In general, the company continues to seek aggressive growth thru creative and forward-thinking business strategies. Stock is strong because many of the company's divisions are performing well.

However, is WDW contributing to the overall health of the company commensurate with expenditures? It doesn't seem to be and this is why I think WDW1974 (and others) suggest that there is panic in TDO right now. Their plan for the last decade has been to cut corners and increase prices. This is a valid short-term business strategy but it does not lead to long-term growth or profits. As a product, WDW is growing stale, not bad, just stale. It's like trying to sell older cellphone or tv technology. Every year it gets a little more dated, a little bit less in demand.

DCA and WWOHP demonstrate that the consumer needs something new and exciting to attract them to spend their money. WDW simply hasn't provided that it a while. If not for the deep discounts and quality cuts, WDW attendance and profits would be down. When a product gets "old", it gets discounted, placed on the sales rack. People still buy it for a sale price for a while but, eventually, the product becomes difficult to sell at any price. Right now, WDW has been placed on the sales rack.

Disney management needs to adopt a strategy that will lead to long-term growth at WDW. DCA and WWOHP have shown the way. Hopefully, Disney management has learned the lesson and will be applying the fix to WDW.

As a stock holder, you should very much care when a business unit underperforms. Right now, it seems to me that WDW is underperforming and its contribution to the company's overall profits will fall within the next few years if the "product" (i.e. WDW) is not upgraded.

 

[jt04]

I don't think the issue is with Disney as a whole. In general, the company continues to seek aggressive growth thru creative and forward-thinking business strategies. Stock is strong because many of the company's divisions are performing well.

However, is WDW contributing to the overall health of the company commensurate with expenditures? It doesn't seem to be and this is why I think WDW1974 (and others) suggest that there is panic in TDO right now. Their plan for the last decade has been to cut corners and increase prices. This is a valid short-term business strategy but it does not lead to long-term growth or profits. As a product, WDW is growing stale, not bad, just stale. It's like trying to sell older cellphone or tv technology. Every year it gets a little more dated, a little bit less in demand.

DCA and WWOHP demonstrate that the consumer needs something new and exciting to attract them to spend their money. WDW simply hasn't provided that it a while. If not for the deep discounts and quality cuts, WDW attendance and profits would be down. When a product gets "old", it gets discounted, placed on the sales rack. People still buy it for a sale price for a while but, eventually, the product becomes difficult to sell at any price. Right now, WDW has been placed on the sales rack.

Disney management needs to adopt a strategy that will lead to long-term growth at WDW. DCA and WWOHP have shown the way. Hopefully, Disney management has learned the lesson and will be applying the fix to WDW.

As a stock holder, you should very much care when a business unit underperforms. Right now, it seems to me that WDW is underperforming and its contribution to the company's overall profits will fall within the next few years if the "product" (i.e. WDW) is not upgraded.

The FLE begins the great WDW revival. A moderate step but a necessary one. Test Track and comprehensive refurbs have been announced. Extra personnel are being brought in. Resources are available that were not previously. I contend this was management's intent all along. They know they have to respond and they will. It has always been that way at WDW.

 

[FrankLapidus]

The FLE begins the great WDW revival. A moderate step but a necessary one. Test Track and comprehensive refurbs have been announced. Extra personnel are being brought in. Resources are available that were not previously. I contend this was management's intent all along. They know they have to respond and they will. It has always been that way at WDW.

I don't really agree with all of your logic here (for one, if it really was management's intent to let things slip to the extent that they have before they intervened then they are woefully inept) but I really do hope that you are proven right when all is said and done. I fear that you won't be but the fear of being let down and disappointed is part and parcel of being a WDW fan these days.

 

[GoofGoof]

As a stock holder, you should very much care when a business unit underperforms. Right now, it seems to me that WDW is underperforming and its contribution to the company's overall profits will fall within the next few years if the "product" (i.e. WDW) is not upgraded.

I know I'll probably get killed for this, but here goes. Isn't that what FLE and Avatar Land are intended to do. They are both upgrading existing parks. DHS is likely to be next. I know a lot of people are down on WDW but DCA was in much worse shape. They needed to focus more corporate resources on that issue. Now that that problem is solved hopefully they will continue to focus on WDW. I know a lot of people hate DVC, but WDW has been building those units like crazy so they must be pretty profitable too from a business prospective. As fans we may not like the strategy, but extracting more dollars from existing guests is another way to grow revenues and profits without increasing attendance.

 

[jt04]

I don't really agree with all of your logic here (for one, if it really was management's intent to let things slip to the extent that they have before they intervened then they are woefully inept) but I really do hope that you are proven right when all is said and done. I fear that you won't be but the fear of being let down and disappointed is part and parcel of being a WDW fan these days.

I understand people's cynacism. But whenever I start getting close to the truth I get attacked like I have been today. Same thing happened right before the FLE was announced. It is a great indicator something is percolating.

Another sign news is about to break is a certain spirit starts to become even more cynical. It is almost as if once news breaks he will have set things up so he can claim responsibility for so-called "spirited change".

He knows I know this which is why he is desperately trying to get me banned. The guys narcissism knows no limits.

So, bottom line, it is OK to have high expectations at this point. All the signs are there and all the planets are aligned.

 

[jt04]

The Themed Entertainment Association (TEA) generates an annual report for theme park attendance. TEA has reported flat attendance for WDW for many years. Quoting from the Orlando Sentinel's article, "Operating profit at Disney's global theme-park division surged 21 percent to $630 million on sales that rose 9 percent to $3.4 billion. That growth was driven by the late March launch of the Disney Fantasy cruise ship; the mid-June opening of a "Cars"-themed attraction in Southern California; and a rebound at Tokyo Disney, which was forced to close for a time last year following a devastating earthquake and tsunami in Japan."

Despite how it sometimes feels )), WDW did not increased overall prices by 9% from last year. With attendance flat, it can be deduced that WDW did not increase revenue by 9%, especially since they continued to offer considerable "room only" and "Free Dining" discounts. This means the overall total of the other locations (including cruise ships) must have increased by more than 9% to make up for the underperforming WDW, suggesting that the gap between WDW (which I believe is the theme-park division's largest asset) and other locations is even greater.

It appears that WDW has performed so poorly that senior Disney management has begun to focus their attention on that resort.

They would not even have cruise ships if they had put WDW on the front burner earlier. Everything is happening in the order it needed to happen IMO.

 

[FrankLapidus]

I understand people's cynacism. But whenever I start getting close to the truth I get attacked like I have been today. Same thing happened right before the FLE was announced. It is a great indicator something is percolating.

Another sign news is about to break is a certain spirit starts to become even more cynical. It is almost as if once news breaks he will have set things up so he can claim responsibility for so-called "spirited change".

He knows I know this which is why he is desperately trying to get me banned. The guys narcissism knows no limits.

So, bottom line, it is OK to have high expectations at this point. All the signs are there and all the planets are aligned.

I have expectations but they aren't really too high right now and I'll retain a cautious optimism. Like I've said in the past (I think maybe in a discussion with you), I am excited about the FLE and think it will improve the overall experience of visiting the Magic Kingdom when it is fully completed in 2014. I don't think I'm too cynical but any cynicism I have is a product of the decline in quality at WDW in recent years. FLE is one step on the ladder to rectifying that but for me it's a perfectly good start and while I have no interest or investment in whatever Avatarland/Pandora turns out to be, I hope that similar steps like that at the MK are taken at DHS, Epcot, AK and Downtown Disney that will remove any doubt or cynicism I have.

 

[jt04]

I have expectations but they aren't really too high right now and I'll retain a cautious optimism. Like I've said in the past (I think maybe in a discussion with you), I am excited about the FLE and think it will improve the overall experience of visiting the Magic Kingdom when it is fully completed in 2014. I don't think I'm too cynical but any cynicism I have is a product of the decline in quality at WDW in recent years. FLE is one step on the ladder to rectifying that but for me it's a perfectly good start and while I have no interest or investment in whatever Avatarland/Pandora turns out to be, I hope that similar steps like that at the MK are taken at DHS, Epcot, AK and Downtown Disney that will remove any doubt or cynicism I have.

I'd be willing to bet money that almost all the folks who claim no interest in Pandora will go. And they will be amazed. Truly amazed. I just have a hunch Disney would never have gone with an outside franchise unless there was some very compelling reason. I think we are talking some great advancement in theme park content.

 

[FrankLapidus]

I'd be willing to bet money that almost all the folks who claim no interest in Pandora will go. And they will be amazed. Truly amazed. I just have a hunch Disney would never have gone with an outside franchise unless there was some very compelling reason. I think we are talking some great advancement in theme park content.

I won't but I'm a tiny, insignificant drop in the ocean and I'm sure millions will visit it and I truly hope that they are impressed by it. As I've said in the past, my stance on Avatarland is based on me wanting to spend my time doing other things at the resort that I enjoy, both in the parks and out. I've never bashed Avatar or those who like it and I hope that the great advancements you speak of are successful enough that they find their way into other areas of the parks. But mine is not an empty claim, I won't visit Avatarland/Pandora when it does eventually opens but I hope that you and everyone else enjoy it.

 

[TalkingHead]

I'd be willing to bet money that almost all the folks who claim no interest in Pandora will go. And they will be amazed. Truly amazed. I just have a hunch Disney would never have gone with an outside franchise unless there was some very compelling reason. I think we are talking some great advancement in theme park content.

Just to be clear, is this more patented JT-speculation that you might later retract? Or is this a guarantee that you might later retract?

Because you would "be willing to bet money" and "have a hunch" that "we are talking some great advancement" that will leave audiences "truly amazed."

So educated assumption? Informed speculation? Or more blind guesses from JT?

I know which one I believe...

 

[ParentsOf4]

The FLE begins the great WDW revival. A moderate step but a necessary one. Test Track and comprehensive refurbs have been announced. Extra personnel are being brought in. Resources are available that were not previously. I contend this was management's intent all along. They know they have to respond and they will. It has always been that way at WDW.

WDW has added Mission Space, Soarin', Toy Story Mania, Expedition Everest, Star Wars II, along others. None of these have "turned WDW around". It's unclear to me why you think FLE will be different but I do hope you are right. So far, it doesn't seem that FLE has been able to generate the same excitement as WWOHP and, IMHO, I don't think it has a chance of generating those types of financial numbers. However, I really do hope you are right.