The Spirited Seventh Heaven ...

BrerJon

BrerJon

Well-Known Member
PhotoDave219 said:
Just a reminder, spoilers go in the spoiler tag Or so help me I will pull this message board over....
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Sorry, I've edited my original post now (can you edit your quoting me too?) - sorry didn't think it was much of a spoiler as I'd read it on here already, but if I'd known you could use spoiler tags I would have done (I didn't, but do now).
 
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PhotoDave219

PhotoDave219

Well-Known Member
BrerJon said:
Sorry, I've edited my original post now (can you edit your quoting me too?) - sorry didn't think it was much of a spoiler as I'd read it on here already, but if I'd known you could use spoiler tags I would have done (I didn't, but do now).
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No worries. Steve explains it best here -> http://forums.wdwmagic.com/threads/add-hidden-spoiler-text.880102/

Not everyone has seen it. Yes its nice they had a cameo/call back but some people like to be surprised. God knows as this Star Wars film comes closer to frutition, I'll be living in a cave.
 
ford91exploder

ford91exploder

Resident Curmudgeon
ParentsOf4 said:
Speak of the devil, I'm not the only one who doesn't like Iger's obsession with stock buybacks.

Here's an interesting read.

The author would like to see higher dividends. Fair enough.

However, perhaps there's someplace else some of that excess cash could be invested, perhaps some place that's sure to provide the company with strong cash flow for decades to come? ;)
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Here is the most interesting part

Iger was using "20% or so" very loosely here. At the time, Disney had spent 40% of its operating cash flows year to date on buybacks. In 2014, that ratio has ballooned to 76%. Seen from a different angle, Disney is spending 116% of its free cash flows on share repurchases.

No wonder TWDC spends like they are broke - effectively they are. Since TWDC is using all the available free cash flow and THEN some on stock buybacks. Interesting to say the least not illegal by any means but very very strange.

Makes you wonder why they are not building a cash hoard like AAPL or CSCO since it would be useful for acquisitions or downturns in the business cycle.

Odd very odd indeed.
 
Nubs70

Nubs70

Well-Known Member
ford91exploder said:
Here is the most interesting part

Iger was using "20% or so" very loosely here. At the time, Disney had spent 40% of its operating cash flows year to date on buybacks. In 2014, that ratio has ballooned to 76%. Seen from a different angle, Disney is spending 116% of its free cash flows on share repurchases.

No wonder TWDC spends like they are broke - effectively they are. Since TWDC is using all the available free cash flow and THEN some on stock buybacks. Interesting to say the least not illegal by any means but very very strange.

Makes you wonder why they are not building a cash hoard like AAPL or CSCO since it would be useful for acquisitions or downturns in the business cycle.

Odd very odd indeed.
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If you are a short sighted CEO, would it not be in self interest to buy back stock at a higher rate than FCF since there is the expectation the costs of borrowing money will remain historically low for some distance in the future?
 
GoofGoof

GoofGoof

Premium Member
ParentsOf4 said:
Speak of the devil, I'm not the only one who doesn't like Iger's obsession with stock buybacks.

Here's an interesting read.

The author would like to see higher dividends. Fair enough.

However, perhaps there's someplace else some of that excess cash could be invested, perhaps some place that's sure to provide the company with strong cash flow for decades to come? ;)
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Stock buybacks and increasing the dividend would both return cash to the shareholders. If you have a bunch of options the dividend doesn't help you since you only receive a dividend on shares held. With a buyback the stock price goes up and makes your options worth more. Now who has a bunch of options and also has the authority to make that call? If only the Chairman of the Board could step in and play the devil's advocate a little when these decisions go down.

A 1% dividend yield is pretty low for a relatively mature business like DIS. They could probably stand to increase the dividend some. Buybacks are a little less permanent than a dividend increase. If you don't have the excess cash next year you can scale back the buybacks without a major share price over-reaction. With a dividend it's never good to have to decrease.

I think we all agree that it would be nice to see a little more of this money spent on P&R and specifically WDW. There is really no way to defend the recent buybacks. However, they do seem to be kicking off a new phase of capital spending so there are some things to be optimistic about.
 
GoofGoof

GoofGoof

Premium Member
Nubs70 said:
If you are a short sighted CEO, would it not be in self interest to buy back stock at a higher rate than FCF since there is the expectation the costs of borrowing money will remain historically low for some distance in the future?
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Yes. After the credit crunch in 2008 most companies built up cash reserves above levels needed to run the business so they had a cushion to fall back on. Now that there is no lack of money available to borrow cheap there is no reason to need that pile of cash.

In this case they aren't actually borrowing money to fund the buybacks. They are using cash on hand. If the debt actually starts to increase and they continue buybacks at this pace it's a problem, even if they are short sighted.
 
ford91exploder

ford91exploder

Resident Curmudgeon
GoofGoof said:
Yes. After the credit crunch in 2008 most companies built up cash reserves above levels needed to run the business so they had a cushion to fall back on. Now that there is no lack of money available to borrow cheap there is no reason to need that pile of cash.

In this case they aren't actually borrowing money to fund the buybacks. They are using cash on hand. If the debt actually starts to increase and they continue buybacks at this pace it's a problem, even if they are short sighted.
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AAPL and CSCO, CAT and a bunch of other don't feel that way, All you need is one bad event (Ebola outbreak anyone?) and the commercial paper market will freeze instantly just like 2008 and Lehman Bros..

Just imagine the nightmare scenario a patient is quarantined for Ebola at WDW. The place will be a ghost town overnight and all the cash generated at the WDW ATM disappears overnight at which point TWDC is in a world of hurt because as I recall they only have 1-2 billion in cash on hand and that's not going to sustain operations very long in light of the 13 BILLION profit WDW produces for TWDC.
 
PhotoDave219

PhotoDave219

Well-Known Member
ford91exploder said:
Here is the most interesting part

Iger was using "20% or so" very loosely here. At the time, Disney had spent 40% of its operating cash flows year to date on buybacks. In 2014, that ratio has ballooned to 76%. Seen from a different angle, Disney is spending 116% of its free cash flows on share repurchases.

No wonder TWDC spends like they are broke - effectively they are. Since TWDC is using all the available free cash flow and THEN some on stock buybacks. Interesting to say the least not illegal by any means but very very strange.

Makes you wonder why they are not building a cash hoard like AAPL or CSCO since it would be useful for acquisitions or downturns in the business cycle.

Odd very odd indeed.
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Well, there's another possible thought: The company could be trying (slowly. Very slowly) to get back to 50.1% in house.
 
PhotoDave219

PhotoDave219

Well-Known Member
the.dreamfinder said:
Perhaps, but that's an awfully expensive thing to do when the stock price is as high as it is.
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Well for a company that's based on creativity, they've certainly done a 180.

Instead of the finance guys saying "will find a way to get the money for your creative project"… It's now the finance guys saying to the creative people "this is what you can have for your project".

I have no problem with the company making a proverbial ton of money,just as a guest I want to see a return and some reinvestment on that money as it goes to my guest experience.

What does that mean? Well… Let's start with basic park cleanliness and basic lighting. Yes, I expect a spill bucket of popcorn to be cleaned up pretty damn quick. I expect everything to be looking fantastic. I expect everything to be lit properly at night. (I still cannot believe the Disney is unable to properly light spaceship Earth at night from the front side anymore… That's like the lights going out on half of Cinderella's Castle.) I expect to be able to walk in the front gate, walk to my favorite attraction and stand in line for that attraction to wait and ride it and that wait not be an unacceptable amount of time. I expect to make up my day as I go along. I don't expect to be forced to plan anything beyond a reservation for dinner. I also expect to pay a reasonable price on merchandise and food.

I also expect construction. I expect changes. I expect redevelopment. And I expect expansion. I expect that when I walked into a park and see something closed permanently, there is something waiting in the wings to take its place. Not for years down the road, not seven years down the road, six months down the road is a bit more acceptable.

These are not unreasonable expectations.
 
muteki

muteki

Well-Known Member
Tahu said:
Not to mention sequel potential. Just imagine "Tomorrowland 2: New Horizons"
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First thing I thought of seeing the shot in the field with the "city" in the background was the Prologue and the Promise.

Film has lots of potential but I thought the trailer was pretty dull. Not sure if I should get excited with Lindelof involved.
 
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