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The Mouse is caught in recession trap: Should you sell Disney?

Posted Feb 3rd 2009 5:45PM by Steven Mallas (RSS feed)
Filed under: Earnings Reports, General Electric (GE), Time Warner (TWX), Walt Disney (DIS), Viacom (VIA), CBS Corp 'B' (CBS), News Corp'B' (NWS), Electronic Arts (ERTS)

Whoa, what a terrible quarter for Disney (NYSE: DIS)! Forget the magic. There's no magic going on at Disney. For the fiscal first quarter, revenues decreased 8%, earnings per share decreased 29%, operational cash flow decreased 60%, and free cash flow was negative. Decrease, decrease, decrease! Looks like Disney's brands cannot fend off a recession, no question. Sorry, Jonas Brothers and Hannah Montana.

Disney, which competes with Time Warner (NYSE: TWX), CBS (NYSE: CBS), Viacom (NYSE: VIA), News Corp. (NYSE: NWS) and General Electric's (NYSE: GE) NBC Universal, earned, after taking out a $0.04 per-share benefit from an investment sale, $0.41 per share. According to my earnings preview, the call was for around $0.52 per share. Well, I thought the Mouse was going to miss, but I think I characterized the potential miss as maybe being on the "slight" side. Yeah, this wasn't a slight miss.

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