The Walt Disney Co. delivered a stellar first quarter boosted by DVD sales and one-time gains from asset dispositions, easily beating analyst expectations.
The media conglomerate has delivered double-digit annual earnings growth for the past few years, sending its stock price soaring more than 70 percent since 2004.
The results have analysts questioning whether Disney can continue that sizzling growth in 2007, especially when compared with the 34 percent growth in 2006 earnings.
The Burbank-based company Wednesday reported fiscal first-quarter earnings of $1.7 billion, or 79 cents per share, for the three months ended Dec. 30, compared with $734 million, or 37 cents per share, in the same period last year.
Those results included 29 cents per share from the sale of its shares in US Weekly magazine and the E! Entertainment channel.
Even without the one-time gains, Disney beat analyst forecasts by 11 cents per share on strong performance from sales of DVDs, including “Pirates of the Caribbean: Dead Man’s Chest.”
Results were also helped by a strong ratings performance at its ABC network and cable channels, including ESPN.
Revenue grew 10 percent to $9.73 billion from $8.85 billion in the same period last year.
Excluding one-time items, earnings grew 43 percent to 50 cents per share. Analysts surveyed by Thomson Financial had expected earnings of 39 cents per share on revenue of $9.51 billion.
Before the results were announced, shares of Disney rose 29 cents to close Wednesday at $35.48 on the New York Stock exchange. Shares rose an additional 72 cents in extended trading.
The biggest gains for the quarter came from Disney’s studio entertainment division, where revenue rose 29 percent to $2.6 billion and operating income more than quadrupled to $604 million from $128 million in the prior year’s first quarter.
The gain came from the sale of DVDs, including the Disney/Pixar film “Cars” and the re-release of “The Little Mermaid.” The latter title also boosted the studio’s profit margins in the quarter.
The strong home video results more than offset a losing quarter for the studio’s theatrical slate, which includes disappointments such as “Deja Vu” and “Santa Clause 3.”
Operating income at Disney’s network division grew 24 percent to $750 million from $606 million in the same period last year. Revenue grew 6 percent to $3.91 billion.
The network gains were driven mainly by increases in subscription fees at the company’s international Disney channels and DVD sales domestically of the Disney Channel hit movie “High School Musical.”
Growth in attendance and spending helped boost revenue and profits at Disney’s theme parks, although the company continues to have difficulty with its most recent park in Hong Kong.
“The early going at Hong Kong has been more challenging than we had hoped,” Disney chief financial officer Thomas Staggs told analysts gathered for a two-day conference at Walt Disney World in Florida.
Top theme park executives just returned from a trip to Hong Kong Disneyland and have identified areas that need improvement, Jay Rasulo, chairman of Walt Disney Parks and Resorts, told analysts Wednesday.
“As we learn more about the market, we remain focused on improving our business results rapidly,” Rasulo said.
Rasulo also outlined concepts the company is considering for expanding its resorts business worldwide, including opening hotels in major cities, opening more water parks and developing themed retail and shopping centers.
Rasulo described the concepts as “blue sky” projects that may never be built. But he said the company is planning to add to its two cruise ships as soon as it can negotiate contracts with shipyards that provide the proper return on invested capital.
Revenue for the quarter increased 4 percent to $2.5 billion and operating income increased 8 percent to $405 million, driven mainly by gains at Walt Disney World.
Revenue at Disney’s consumer products division fell 6 percent in the quarter to $692 million and operating income dropped 13 percent to $235 million.