NEW YORK—Walt Disney Co. reports earnings for the second fiscal quarter on Tuesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Disney's movie studio hits included "National Treasure: Book of Secrets," "Enchanted" and its 3-D hit "Hannah Montana/Miley Cyrus: Best of Both Worlds Concert Tour."
Disney said it will team up with several Japanese companies to produce animation for television in Japan. Disney also plans to publish Indian-language story books for the first time.
The company signed Chief Executive Robert Iger to a new five-year contract that will pay him an annual salary of $2 million plus bonuses and stock awards that could be worth millions more.
BY THE NUMBERS: Analysts surveyed by Thomson Financial forecast second-quarter earnings of 51 cents per share on revenue of $8.47 billion.
ANALYST TAKE: Analysts are watching Disney's second-quarter theme park and advertising results closely for signs of weakness due to the broader economic slowdown.
Cowen and Company analyst Doug Creutz noted that Disney has said that weakening consumer confidence has not yet hurt advance theme park and resort bookings. "However, we believe that as the U.S. recession deepens, consumer confidence will remain low, and believe Disney will likely see declines in advance vacation bookings," he said.
Lehman Brothers analyst Anthony DiClemente, however, noted that a weaker dollar will encourage international visitors and said the company's U.S. theme parks have been diversified by cruise lines and international parks.
DiClemente said Disney is also less dependent on advertising revenue than other media companies. "All in all, we believe there may be less economic exposure for Disney's operating segments to the cyclical economic factors on which many investors appear focused."
RBC Capital Markets analyst David Bank thinks advertising is a bigger issue. "Disney's business has significant exposure to advertising expenditures," he said. "An adverse change or decline in advertising expenditures could negatively affect many of the company's business units."
WHAT'S AHEAD: BMO Capital Markets analyst Jeffrey Logsdon expects Disney's "The Chronicles of Narnia: Prince Caspian" and "Wall-E" to be among the top five movies of the summer. However, analysts say Disney is facing tough comparisons from "Pirates of the Caribbean: At World's End" and "Ratatouille" last summer.
Disney has taken over 220 Disney Store outlets in North America from The Children's Place Retail Stores Inc. and will close about 100 stores in the U.S. and Canada. The Children's Place subsidiary that ran the chain filed for Chapter 11 bankruptcy protection in March.
Disney is also launching a new film production unit called Disneynature to produce and distribute documentary films through at least 2012. Also Disney said its Pixar animation studio will release all of its movies in 3-D format beginning with "Up" next year.
STOCK PERFORMANCE: Disney shares traded between $26.30 and $33.23 during the quarter. Ultimately, the stock dipped about 3 percent to close at $31.38 on March 31.
