Walt Disney board extends Iger's contract as Chairman and CEO through June 2018

[ParentsOf4]

Added note: the buybacks shouldn't increase market cap. The market cap should stay the same.

Projecting the first 9 months of FY2014 onto the last quarter, Disney revenue is up about 56% during Iger's first 9 years as CEO, a respectable but not particularly exciting 5.1% compound annual growth rate despite 3 high-profile acquisitions.

Yet market cap is up roughly 200%.

Maybe, just maybe, repurchasing a billion shares of stock in order to inflate EPS had just a bit to do with that.

What is exciting for shareholders is that company-wide gross margins are up under Iger.

 

[alphac2005]

I'd make a bet the day Shanghai opens, provided he doesn't have Stars Wars -land on the table he graciously steps down.

Every analyst and money mover in this country is frantically obsessed with the "Asian growth market" (type that bad boy in and that buzzy term is everywhere) and Iger has been as aggressive as almost any consumer products company's Chief Executive in this country of trying to penetrate the Asian markets for long-term profit gain. Golden boy of Wall St., that's the former weatherman. While he's in Asia, he needs to get all those burnt out lightbulbs replaced in the Florida property.

 

[alphac2005]

Projecting the first 9 months onto the last quarter, Disney revenue is up about 56% during Iger's first 9 years as CEO, a respectable but not particularly exciting 5.1% compound annual growth rate despite 3 high-profile acquisitions.

Yet market cap is up roughly 200%.

Maybe, just maybe, repurchasing a billion shares of stock in order to inflate EPS had just a bit to do with that.

What is exciting for shareholders is that company-wide gross margins are up under Iger.

They all continue to push aggressively with the share repurchasing for the short-term gain (hmmmm.. sensing a theme), yet don't care to look at the negative impact higher future interest rates increasing the cost of repayment of all that debt.

 

[GrumpyFan]

I'm guessing that you never visited WDW prior to 2000.

I'm guessing that you have no clue about the level of investment in WDW annually both before and since The Weatherman took over as CEO (@ParentsOf4 can help you with this as he sleeps with the numbers under his pillow!)

I'm guessing that while you credit Iger with making Disney MORE profitable than it has ever been that you also don't realize how incredibly cheap that makes him with regards to investing in the product.

And I'm guessing that you have a fundamental lack of understanding what is going on at WDW when you talk about what is happening now or the future in all four parks and then tout the rebuilding of a lifestyle/shopping center as one of your major points as to how Iger is doing things right in the swamps.

****, I need a vacation!!!

Look, I get that Iger hasn't been the most dynamic leader in regards to the Parks & Resorts. In fact, I would go so far as saying that he's been ultra conservative in terms of investment in them and perhaps even the company itself. I'll go even further to say that he's not actually invested a great deal IN the company itself, but added investments externally and shored up the company value in these huge acquisitions. However, I think you'll agree that it was badly needed after Eisner gutted it in his last 5 years, where his only contributions were worn out direct to video sequels and a very cheap Six Flags-like theme park, with no imagination whatsoever.

I get that WDW and many of the parks have been left to sit idle for many years with no major creative investments, except maybe DCA, which was only done to correct Eisner's screw up. Like most everyone else here, I would love to see more new imaginative attractions make their way to the parks. I'm not a fan of NGE/MM+/MB and the billion + dollars they wasted to put it in. I've watched and even written on my own blog about how Disney has lost market share for their domestic parks, and it irritates me to watch it happen, when I know they can do better.

So, all this to say, yeah, I get it, Iger (the Disney CEO who got his start as a weatherman), has done a pretty good job for the Disney Company. He's had some mis-steps, sure, but who hasn't. He hasn't done everything we wanted him to, but he hasn't wrecked things either. But, I also get that finding a truly inspired leader to run the Disney company who has a vision and spirit of imagination like the founder, is probably going to be extremely difficult, if not impossible to find. Just look at what's happening to Apple in the wake of Steve Jobs' passing. The point I'm trying to make here is, Iger's replacement is not likely going to be much better. The company is driven by Wall Street and the constant drum beat of quarter over quarter profit, and the investors don't really care about shiny, imaginative new attractions, they just want to see the money. I know that goes against Walt's original idea, and I hate it, because, like you, I think this company is capable of so much more, but it's the culture we live in, and sadly, I just don't see it changing. I guess I've just come to accept where they are as the new norm. I'm not necessarily happy or comfortable with it, but wishing and hoping otherwise just seems futile because I don't see them reversing course.

 

[GrumpyFan]

Iger's reign can be easily summed up to us purists: He took the name and legacy of the company, Walt Disney, and has rapidly turned the company into Ford. Ford is simply Ford to most. For many decades, Ford was about the innovator and creator Henry Ford. Disney is nothing but a brand now. When my four year old says Disney, he might as well say McDonald's, Best Buy, whatever, it's just a name. Disney was one of the last brands that was tied to an innovator (with their namesake) and espoused incredible loyalty.

Hit the nail right on the head! It's no longer about the legacy and tradition for any of these companies, it's about leveraging the name/brand to drive more and more profit and market share. Large companies aren't pursuing innovation any more, they're just buying smaller ones who have already innovated and then milking their profits as long as they can.

 

[MichWolv]

Projecting the first 9 months of FY2014 onto the last quarter, Disney revenue is up about 56% during Iger's first 9 years as CEO, a respectable but not particularly exciting 5.1% compound annual growth rate despite 3 high-profile acquisitions.

Yet market cap is up roughly 200%.

Maybe, just maybe, repurchasing a billion shares of stock in order to inflate EPS had just a bit to do with that.

The market is not that easy to fool. Repurchases are rewarded only if the market believes they are a good use of funds. I, for one, prefer them to dividends. That way, those who want to turn their ownership into cash can do so, while those that don't can increase their relative holdings in the company without investing more cash.

And repurchases DECREASE market cap. So if a company repurchases 5% of its stock, the stock price must go up at least 5% just to market cap equal. If your goal is increased market cap, buying back your stock is a stupid way to achieve it, because you need to overcome the repurchases with larger stock price increases.

 

[MichWolv]

You're totally on the money here. Buybacks drive market cap.

They're also just a band-aid and a bit of a farce.

Buybacks don't drive market cap. Some think they prop up the stock price, but they only increase market cap if they drive up the stock price by a higher percentage than the actual buybacks.

 

[jakeman]

True, true. I wasn't digging that deep into mathematical drivers, but into perceived value drivers. One of the many Apple effects, which has worked for Disney, as well as other large companies. It's a trendy thing to do lately.

A couple articles for those interested in other companies using buybacks to increase stock prices and attempt to increase their market cap:

http://online.wsj.com/articles/companies-stock-buybacks-help-buoy-the-market-1410823441

http://appleinsider.com/articles/14...ave-helped-increase-market-cap-by-100-billion

Yeah @MichWolv. Get educated, you rube.

 

[Sue_Vongello]

There's no denying the profitability of the company, stock holders should be thrilled.

But ... what has he done that's so innately him?

Acquiring Marvel, Lucasfilm, and Pixar are like getting a fastball right down the middle after the catcher tipped you off. There's no skill in that.

He's building parks all over the world? Well what CEO wouldn't go to some of those booming foreign markets where they have people willing to split the bill?

The movies are better ... well yea he left people that actually know what their doing (Lassiter/Horn) alone.

He revamped DCA! (After it was poorly made and ran into a ground)

Forgive me if I don't see what he did that was so ground breaking?

So far all I can see as his signature move is at WDW where he increased profits by totally not understanding what kind of cash cow he had ... His signature plan was to cut operating costs at WDW by decimating maintenance, reducing staff, cutting quality, and then kick start profits by spending every penny on a half baked data mining tool.

But hey profits don't lie so this move makes sense but still this guy has done nothing that any first year business student wouldn't do EXCEPT neglecting the potential at WDW.

 

[MichWolv]

True, true. I wasn't digging that deep into mathematical drivers, but into perceived value drivers. One of the many Apple effects, which has worked for Disney, as well as other large companies. It's a trendy thing to do lately.

A couple articles for those interested in other companies using buybacks to increase stock prices and attempt to increase their market cap:

http://online.wsj.com/articles/companies-stock-buybacks-help-buoy-the-market-1410823441

http://appleinsider.com/articles/14...ave-helped-increase-market-cap-by-100-billion

This is all true, as long as the market agrees that buying back the stock is a good idea. And the market will believe that if the market thinks that the stock is undervalued. But if the market believes that the stock is undervalued, the stock price increase is coming soon anyways.

 

[Californian Elitist]

I thought the rumors were that Toontown was getting replaced by Star Wars. Also I guess it's easy to forget Disneyland's problems when we're so focused on Disney World here. Sad I'll never see New Orleans Square in its original form.

Even if Star Wars were to replace Toontoown, I'd still be very upset. Toontoown makes more sense than Star Wars.

I have a friend who would rather see Disneyland close or blow up before the ruining of its history continues.

 

[MichWolv]

Hit the nail right on the head! It's no longer about the legacy and tradition for any of these companies, it's about leveraging the name/brand to drive more and more profit and market share. Large companies aren't pursuing innovation any more, they're just buying smaller ones who have already innovated and then milking their profits as long as they can.

And most of the small companies that are innovating are doing so in the hopes of being acquired by large companies with resources to exploit those innovations. It is the nature of capitalism.

 

[MichWolv]

Even if Star Wars were to replace Toontoown, I'd still be very upset. Toontoown makes more sense than Star Wars.

I have a friend who would rather see Disneyland close or blow up before the ruining of its history continues.

Having been to Disneyland long before Toontown existed, I have trouble thinking of it as part of Disneyland history. It felt lame to me right when it opened. The only truly memorable thing about it for me was watching people dive out of the way of the ill-conceived Jolly Trolley when it was running.

I do like the Roger Rabbit ride itself, but that's a character and world that Disney has let die, so I say it's time for Toontown to fade away as well. Retheme Gadget's Go-coaster to keep a coaster for the kids, gut the rest and make it something better.

 

[Californian Elitist]

I thought the rumors were that Toontown was getting replaced by Star Wars. Also I guess it's easy to forget Disneyland's problems when we're so focused on Disney World here. Sad I'll never see New Orleans Square in its original form.

Also, it seems that the problems between DL and WDW are somewhat the same, but also mainly different. When I read the posts here, I see a lot of complaints about the condition of the parks and attractions. Over at MiceChat, the Disneyland problems we talk about don't have that much to do with the condition of the parks. Walt Disney gets brought up a lot, and we talk about how much the park has changed (negatively) since opening day.

 

[Californian Elitist]

Having been to Disneyland long before Toontown existed, I have trouble thinking of it as part of Disneyland history. It felt lame to me right when it opened. The only truly memorable thing about it for me was watching people dive out of the way of the ill-conceived Jolly Trolley when it was running.

I do like the Roger Rabbit ride itself, but that's a character and world that Disney has let die, so I say it's time for Toontown to fade away as well. Retheme Gadget's Go-coaster to keep a coaster for the kids, gut the rest and make it something better.

I didn't say it was part of Disneyland's original history. Clearly it's not, but Toontown doesn't need to go, IMO. Does it need help? Yes.

 

[jakeman]

Retheme Gadget's Go-coaster to keep a coaster for the kids, gut the rest and make it something better.

Anyone else ever find Gadget attractive?

No?

Okay...I'll see myself out...

 

[MichWolv]

I didn't say it was part of Disneyland's original history. Clearly it's not, but Toontown doesn't need to go, IMO. Does it need help? Yes.

Nor did I say "original history". But technically, even the new mess in New Orleans Square is part of Disneyland's history now. I know some teenagers that were upset at the Epcot wand dying because "It's part of Epcot's history" -- they didn't know any different. My point (which I did not explain explicitly) was simply that what one considers part of history worth saving is often influenced by what was there when one first became aware of the place. Heck, I still don't even think Star Tours "fits" in Disneyland. I love the ride and always have, but "Adventure Through Innerspace" is the ride I associate with Disneyland in that spot. That it isn't there still feels wrong to me.

 

[MichWolv]

Anyone else ever find Gadget attractive?

No?

Okay...I'll see myself out...

I highly recommend deleting that post.

 

[Gabe1]

Sums up my feelings

 

[Belowthesurface]

I'm guessing that you never visited WDW prior to 2000.

I'm guessing that you have no clue about the level of investment in WDW annually both before and since The Weatherman took over as CEO (@ParentsOf4 can help you with this as he sleeps with the numbers under his pillow!)

I'm guessing that while you credit Iger with making Disney MORE profitable than it has ever been that you also don't realize how incredibly cheap that makes him with regards to investing in the product.

And I'm guessing that you have a fundamental lack of understanding what is going on at WDW when you talk about what is happening now or the future in all four parks and then tout the rebuilding of a lifestyle/shopping center as one of your major points as to how Iger is doing things right in the swamps.

****, I need a vacation!!!

I agree with all of this.

If you work for this company in the theme parks and resorts division, you would understand how bleak and disappointed the outlook is on behalf of the Cast. All of us recognize how money hungry WDW is and how little of substance is actually put here.

The Cast are sick of My Magic+ and are always quick to curse it. So much has been lost or done cheaply around here that it has become a joke when we compare ourselves to all the other Disney parks. Literally, we openly admit how cheap things are around here. All too often you hear the gripes about why the cost of MM+ was not spent on making things better.

Moral is low and the way things are run around here is very clear to the Cast. Even those who LOVE everything that's done here and defend it all, will tell you behind the scenes that they realise how poor things are at WDW.

You may not see why things are worse and you may not see why the future of WDW is a joke, but WE DO. Take it from those who operate this place from the front lines or from behind the curtain, we know more than you and hear more than you ever will.