Hope and some Iger

[MichWolv]

Are there really stockholders that don't want expansion in the parks? What are they stupid or something? :shrug:

No - they are investors, not fanboys like us.

Expansion ain't free, and money used for that isn't used for other things. Stockholders will want the cash to spent in whatever way they think will generate the biggest return. Some would think park expansion would do it -- others would probably think the movie business is the way to allocate resources -- and others would be in favor of buying back stock.

The stock buy-back is actually the easiest to analyze. Let's say you believe that Disney's stock price today is 20% below where it should be because Disney's share price has been driven down by concerns that the economy will hurt Disney far worse than you believe it actually will hurt Disney. You'd probably want Disney to put any available cash into buying its shares back at today's market price, because you would think there's a built-in gain of 20% -- a level of return that it virtually impossible to achieve through other investments.

 

[jt04]

It is rarely the case that any shareholder of a company the size of Disney and as widely-held as Disney has enough leverage to impact decisions. Disney's history also doesn't include buying out huge shareholders en masse, but instead just picking up shares in the market when the company believe it's stock is a good investment. I suspect that's what we're seeing here.

So, if the company uses its resources to buy shares, it means that managmenet thinks that is a better use of resources than other uses, such as building attractions. That could be because the company projects that even after allocating a lot of resources to building attractions, there is still cash or cheap borrowing capacity left over to buy shares. Or it could mean that management believes the return from building attractions is lower than that the return from buying stock in what is now a depressed market.

It's certainly better that the company thinks it will have cash to spend in the near future than if the company were saying there was a cash crunch coming, but, from this alone, I can't muster up any optimism that it means captial spending on the parks will happen.

See DCA.

As for WDW, we will know shortly. I also find it hard to believe any stock holders have enough leverage to stop projects. Except SJ, and he seems to be in favor of development. See Pixar Place.

 

[jt04]

No - they are investors, not fanboys like us.

Expansion ain't free, and money used for that isn't used for other things. Stockholders will want the cash to spent in whatever way they think will generate the biggest return. Some would think park expansion would do it -- others would probably think the movie business is the way to allocate resources -- and others would be in favor of buying back stock.

The stock buy-back is actually the easiest to analyze. Let's say you believe that Disney's stock price today is 20% below where it should be because Disney's share price has been driven down by concerns that the economy will hurt Disney far worse than you believe it actually will hurt Disney. You'd probably want Disney to put any available cash into buying its shares back at today's market price, because you would think there's a built-in gain of 20% -- a level of return that it virtually impossible to achieve through other investments.

Trust me, expansion equals $$$$$$$. So they must be stupid. Watch what happens at DCA when WoC opens. And that is just the beginning.

 

[Studios Fan]

Isn't it more often the case that share buybacks are used as a signaling tool for management to say to the market "our stock is so cheap, even we want to buy it!". Usually it's not designed to shift influence away from a party. I don't think that it's all that common for a targetted buyout of a specific investor/s to be termed as a "Buyback program".

Typically this is the case. They buy back shares to have less shares out there which obviously helps in a couple of ways. 1. they have less shares that they have to pay dividends on and 2. less shares out there drives the value of the stock up. That's simple supply and demand.

 

[Walter Yensid]

Why acknowledge him at all? Seriously. You know he was going to find a way to turn this as a negative on WDW. Please stop feeding the trolls.

GothMickey,

Sorry about that. I loss my sense there for a moment...and I have been doing so well recently.

Anyway, you are right...In a later reply to my post, he ends up saying that Iger is not involved in final decision making on $300 million to $1.2 billion projects. I guess those are two small for him...he only gets involved with the $5 quadrillion billion million projects. And he also said that the Board votes on these projects...I guess his Board seat was taken away between my initial post and his reply...maybe Iger got an Eisner 'no confidence' vote and is now off the board. (insert Heavy sarcasm here)

Anyway, Conundrum is just that...a conundrum to me. So, I will move on and sniff the pixie dust. Thanks for setting me straight, GothMickey.

And sorry to all the other posters for the aside. Back to your scheduled programming.

 

[The Conundrum]

GothMickey,

Sorry about that. I loss my sense there for a moment...and I have been doing so well recently.

Anyway, you are right...In a later reply to my post, he ends up saying that Iger is not involved in final decision making on $300 million to $1.2 billion projects. I guess those are two small for him...he only gets involved with the $5 quadrillion billion million projects. And he also said that the Board votes on these projects...I guess his Board seat was taken away between my initial post and his reply...maybe Iger got an Eisner 'no confidence' vote and is now off the board. (insert Heavy sarcasm here)

Anyway, Conundrum is just that...a conundrum to me. So, I will move on and sniff the pixie dust. Thanks for setting me straight, GothMickey.

And sorry to all the other posters for the aside. Back to your scheduled programming.

*facepalm*

 

[MichWolv]

No - they are investors, not fanboys like us.

Expansion ain't free, and money used for that isn't used for other things. Stockholders will want the cash to spent in whatever way they think will generate the biggest return. Some would think park expansion would do it -- others would probably think the movie business is the way to allocate resources -- and others would be in favor of buying back stock.

The stock buy-back is actually the easiest to analyze. Let's say you believe that Disney's stock price today is 20% below where it should be because Disney's share price has been driven down by concerns that the economy will hurt Disney far worse than you believe it actually will hurt Disney. You'd probably want Disney to put any available cash into buying its shares back at today's market price, because you would think there's a built-in gain of 20% -- a level of return that it virtually impossible to achieve through other investments.

Trust me, expansion equals $$$$$$$. So they must be stupid. Watch what happens at DCA when WoC opens. And that is just the beginning.

I hope you're right, and that Disney decides to throw more money into the parks. But really -- you believe you are a better judge of how to invest money than the professional investment managers? If you are, you should by now be rich enough to have absolutely not a care in the world.

 

[jt04]

I hope you're right, and that Disney decides to throw more money into the parks. But really -- you believe you are a better judge of how to invest money than the professional investment managers? If you are, you should by now be rich enough to have absolutely not a care in the world.

Money!? Pffffft.

I don't have a care in the world. Well, except for that obsession with all things WDW deal. :lookaroun

I could turn the Disney empire into the greatest entertainment company in history. But it appears someone may have beat me to it. :lol:

 

[mickeyPSU]

well....

"In October 2005, Bob Iger replaced Eisner at Disney, and Iger quickly worked to patch up relations with Jobs and Pixar. On January 24, 2006, Jobs and Iger announced that Disney had agreed to purchase Pixar in an all-stock transaction worth $7.4 billion. Once the deal closed, Jobs became The Walt Disney Company's largest single shareholder with approximately 7% of the company's stock. Jobs's holdings in Disney far exceed those of Eisner, who holds 1.7%, and Disney family member Roy E. Disney, who held about 1% of the company's stock and whose criticisms of Eisner included the soured Pixar relationship and accelerated his ousting. Jobs joined the company's board of directors upon completion of the merger.
Jobs also helps oversee Disney and Pixar's combined animation businesses with a seat on a special six-man steering committee."

It's from Wiki but still mostly correct.

Traditionalist Disney fans see Job's as poison. He doesn't seem to care too much for the fab five and might have a large grip on the so-called "pixarization" of the parks.
See:
http://www.businessweek.com/magazine/content/06_06/b3970001.htm

No Jobs "could" mean less Pixar. Of course... it's very unlikely for two reasons. 1) Jobs isn't a dictator - I believe and 2) Job's isn't the only one who sees opportunity and goes for it.

The shareholders in question in my theory would include people who own stock, help make decisions, and don't contribute or hamper progress. One of the many reasons I feel WDW hasn't seen much love.

The problem I see with this theory is, who are these shareholders? Steve Jobs is currently the WDC's largest individual shareholder and he owns 7% of the company's outstanding stock. After him is Eisner with 1.7% of shares, and then Roy E. Disney with 1%. Aside from Jobs, it'd be difficult to prevent progress with these percentages (and Jobs is on the board - so even if he was totally bought out it wouldn't destroy his influence). The last time Disney had shareholders that influential was the Bass Brothers, and they've been more or less out of the picture since 9/11.

One other thing - Disney can only buy shares that are already on the market - not that are being held. So if they're trying to take influence away from someone by buying shares, that person would have to sell their shares first, and would have already lost their influence.

I try not to be cynical, and I also have lots of reasons for hope right now, but I can't see this news as being meaningful for the parks in any concrete and/or predictable way. The only thing we can know for sure is that this is either in response to, or an attempt to influence, current market conditions (or both).

 

[Oberon81]

btw, is your name in reference to Mr. Miracles partner?

Actually, Oberon was the king of the elves....
and it's also a mighty tasty beer from Bells Brewery.

 

[Oberon81]

It is rarely the case that any shareholder of a company the size of Disney and as widely-held as Disney has enough leverage to impact decisions. Disney's history also doesn't include buying out huge shareholders en masse, but instead just picking up shares in the market when the company believe it's stock is a good investment. I suspect that's what we're seeing here.

So, if the company uses its resources to buy shares, it means that managmenet thinks that is a better use of resources than other uses, such as building attractions. That could be because the company projects that even after allocating a lot of resources to building attractions, there is still cash or cheap borrowing capacity left over to buy shares. Or it could mean that management believes the return from building attractions is lower than that the return from buying stock in what is now a depressed market.

It's certainly better that the company thinks it will have cash to spend in the near future than if the company were saying there was a cash crunch coming, but, from this alone, I can't muster up any optimism that it means captial spending on the parks will happen.

Thank you for clarifying things for me.
I do like to hold the possibility that some investors might want to buy out other people to fulfill my Arrested Development/ Disney fantasy.

 

[mansionfan84]

Actually, Oberon was the king of the elves....
and it's also a mighty tasty beer from Bells Brewery.

I thought that that was the reference actually