Originally Posted By SuperDry <<< Because they create revenue by selling stuff. As their stock price tanks, they have less firepower in credit worthyness for creating product to sell. The will make less DVDs, toys, and all other consumer products. With less product to sell, revenue will decline. >>> I think you have your cart before your horse.
Originally Posted By Sport Goofy They also took a loss in the quarter due a bad fule hedge for the cruise line. That one-time event skewed the revenues vs. profits numbers. All of these figures are real nice, but the one everyone needs to pay attention to is free cash flow. Disney has historically paid for all parks investment with free cash flow. If there is no free cash flow, there is no money to build new things.
Originally Posted By Sport Goofy ^^ Duh. GDP is declining. Of course Disney revenues will decline. Do you think they're not immune to the broader economy?
Originally Posted By dshyates It is also important to note that earnings were propped up by the one time sale of 2 latin american pay -per-view networks. If you exclude this one time gain, the share price would have been $.41.
Originally Posted By Socrates You know, when I heard this my first thought was "All these things we've decided they're doing wrong and they're still making money in a lousy economy." Socrates "The unexamined life is not worth living."
Originally Posted By fkurucz SG is right about free cash flow. You can be profitable but have negative cash flow. Of course if you feel that things will pick up in the future you can borrow money, and while credit is tight, Disney is a blue chip company with some very valuable assets. If it comes to it they can borrow. I understand that quite a few blue chips have been sellings lots of bonds lately, even though they have tons of cash. I am guessing that its a hedge, in case the repression lasts longer than expected. Better to borrow it now while interest rates are low and you don't need it, as opposed to later when rates are higher and you are broke.
Originally Posted By Spirit of 74 <<Ah, the hyperbole . . .>> Ah, the management apologist ... << They're predicting a 22% drop in revenues. >> <<Revenues were down 8%.>> Yeah ... the above figure was what the experts who get paid far more than I do to sit and pontificate on CNBC said ... I didn't pull 22% out of my a$$. <<The really bad figure here is free cash flow. It was negative for the quarter.>> We finally agree on something. This means their ATM ain't spitting out Franklins anymore. <<For all the armchair CEOs out there asking why Disney would be cutting back sharply now, this is why.>> Many of the 'armchair CEOs' are smart enough to realize that this was going to be a problem when WDW was virtually printing money and Disney simply scooped it up and spread it around the company like manure on a freshly laid lawn ... because all the cutting to make them lean and mean (and make countless millions for all the outside consultants, who should all be the first to be cut loose in times like this)means they now cut muscle and bone. The fat's been gone since this decade's start. And WDW is going to have a tired, stale, much lower quality product to offer when this downturn ends ...(that is if it ever does). <<This isn't a small recession. It's going to last for some time. And once cash flow turns negative, it only takes so long for it to run dry. This is why the spending has stopped. Now, the question is how long will the economy remain this sour? Another year? 2 years? 5 years? Does Disney have 5 years worth of cash on hand to ride it out?>> The godawful 'leadership' that began in the mid/late-90s has finally come home to roost. WDW is going to be a shell of its former self if this keeps up. Good thing we have Shanghai DL to look forward to, right? (Paging Leemac to the thread ...) Oh, I forgot we also have the way kewl AIE to be a major attendance driver.
Originally Posted By dshyates Spirit don't forget the Bay Lake Tower, DAKLVillas, and the Treehouse Villas. Disney is spending money right and left at the FL property. Good thing too. They will be ROLLING in the dough as soon as they sell all the condos. Building condos is like printing money.
Originally Posted By Spirit of 74 <<I've been trying to read through the news stories, and I'm wondering if there's any info on park attendance. I see where they say park revenue is down, but is that because fewer people are attending, or are the attendees spending less per person?>> Disney doesn't like to talk about attendence in best of times. These aren't those, although you should be able to find a comparison between FQ1'08 and FQ1'09 in today's report. I haven't had a chance to look at it yet. And youe better believe guest spend had to have been down. << Also, is there any sort of breakdown on the various parks? Sorry if the answer's obvious and I'm just not seeing it.>> No. But it was funny to hear Iger and Staggs touting the strength of attendance at the foreign parks when they don't own one piece of Tokyo and are only partial owners in Paris and HK. And I am sure DLP is doing gangbusters since I got a 40% off offer in my email today. When asked about WDW's future outlook all they would say were bookings were up for the next two quarters ... UP FROM WHAT? And frame it in the proper context, most people are staying at HUGE discounts (Buy 4/Get 3 free), which isn't going to look good for the bottom line anyway. The arrogance of these folks is amazing.
Originally Posted By Spirit of 74 <<Another clear indicator was the lack of a crowd at the Libery Inn, and Electric Umbrella.>> Well, that may be that people just realize they can get a far better burger for 99 cents at Wendy's.
Originally Posted By Spirit of 74 <<SG is right about free cash flow. You can be profitable but have negative cash flow. Of course if you feel that things will pick up in the future you can borrow money, and while credit is tight, Disney is a blue chip company with some very valuable assets. If it comes to it they can borrow.>> If Disney can't obtain credit then it's time to talk about the company disappearing. I think we can reasonably assume that Disney can borrow if it needs to. All this numbers talk is making my head spin ... I was thinking Disney was announcing they're putting audio on the trains when they rebuild the abouttocollapse track of Space Mountain and that the Little Mermaid clone was coming to MK and work was commening on major projects at those other parks too ... where's the pixie dust when you need it? (oh yeah, Tokyo -- shout out to TDLFAN wherever he may be!)
Originally Posted By Spirit of 74 <<Spirit don't forget the Bay Lake Tower, DAKLVillas, and the Treehouse Villas. Disney is spending money right and left at the FL property. Good thing too. They will be ROLLING in the dough as soon as they sell all the condos. Building condos is like printing money.>> The greedy bastards thought it was. I'm just wondering if we'll see some fall guys when The Street starts putting the heat on Iger starting ... I dunno ... tomorrow!
Originally Posted By dshyates I wonder if their free cash flow would be any better if they didn't have 3 condo development in progress at this unfortunate time. I wonder if the panic would be the same if instead of haveing a ton of money tied up in condos, they had spent it on new attractions. I wonder what kind of attraction(s) the money spent on Bay Lake Tower could buy.
Originally Posted By Sport Goofy << The godawful 'leadership' that began in the mid/late-90s has finally come home to roost. >> Disney leadership is responsible for a global economic disaster? << I wonder if their free cash flow would be any better if they didn't have 3 condo development in progress at this unfortunate time. >> Disney's largest capital expenditure that affects cash flow right now is the construction of the 2 new Disney Cruise Line ships. DVC is just a blip in comparison. << I wonder what kind of attraction(s) the money spent on Bay Lake Tower could buy. >> Probably a lot less of an attraction that you would like to think. << I think we can reasonably assume that Disney can borrow if it needs to. >> As a shareholder, I don't really care to see Disney borrow much more than the $12B in debt they already have on the books. If they end up borrowing their way out of problems, it only makes it less likely for the company to recover in the event that we actually end up with a decent economy again. The smart thing to do now is to buckle down and conserve cash for as long as possible until there's signs of economic activity again. That's going to be a while.
Originally Posted By Sport Goofy << I'm just wondering if we'll see some fall guys when The Street starts putting the heat on Iger starting ... I dunno ... tomorrow! >> The heat to do what? The only heat Wall Street has ever put on Disney is to sell its assets and break up the company. Is that the solution you are looking for? If you think "Wall Street" is going to be a savior here, you haven't been paying attention to how things operate there. Really, really naieve.
Originally Posted By MPierce >> When asked about WDW's future outlook all they would say were bookings were up for the next two quarters ... UP FROM WHAT? And frame it in the proper context, most people are staying at HUGE discounts (Buy 4/Get 3 free), which isn't going to look good for the bottom line anyway. The arrogance of these folks is amazing. << You mean the Mouse extending the buy 4 get 3 free through August wasn't done out of the kindness of his heart to benfit his loyal guest Are you telling me he is really sucking wind, and trying to keep the numbers up there. Gosh Spirit, and I was just starting to really feel the Magic!
Originally Posted By Spirit of 74 <<Disney leadership is responsible for a global economic disaster?>> I was going to say no ... but when I blame Bush (Cheney and Congress too!) people get on me so ... maybe. Seriously, I blame Disney for cutting the quality of their product constantly whether the times are great, good, fair, bad or awful (and I agree with Gordon Brown when he says we're in a depression and the US media is downplaying/failing to report it!) like now. If Disney had been investing and reinvesting in WDW during the past decade, they could sit back and do nothing now. But they haven't. And they have such a stale product in FLA that no marketing campaign is going to change. So now I think they need to be bold and find a way to invest despite their cash flow situation. Universal and Busch are in the process of putting billions into Orlando over a three-year period. Disney is cleaning Space Mountain and replacing its track so it doesn't have a tragedy on its hands and checks going out to next of kin, adding Obama to the HoP (too bad we couldn't have just had Bush stay for another four years, we'd all have been dead and nothing would matter), and passing off a karaoke contest at TPFKaTD-MGMS as a new major attraction when it is anything but. Oh yeah, they're also calling an eight-year old parade 'new' because they've moved some characters around, changed costumes and added some balloons. << I think we can reasonably assume that Disney can borrow if it needs to. >> <<As a shareholder, I don't really care to see Disney borrow much more than the $12B in debt they already have on the books. If they end up borrowing their way out of problems, it only makes it less likely for the company to recover in the event that we actually end up with a decent economy again. The smart thing to do now is to buckle down and conserve cash for as long as possible until there's signs of economic activity again. That's going to be a while.>> I don't think you're exactly wrong, for once, but I also have grave concerns about what WDW is going to be like in five years by playing things conservatively. They've done so when WDW was literally spitting out Franklins. Are they truly looking for a product that's just 'better than Six Flags?' Bold companies take advantage of situations like this to grow their businesses. I've even said I'd rather see them shutter a few parks, a few days a week if those savings could be used for capital improvement. Anything at this point is better than the benign neglect that has been SOP since Eisner brought the consultants to MBAs to power in the mid-late 90s.
Originally Posted By Spirit of 74 << I'm just wondering if we'll see some fall guys when The Street starts putting the heat on Iger starting ... I dunno ... tomorrow! >> <<The heat to do what? The only heat Wall Street has ever put on Disney is to sell its assets and break up the company. Is that the solution you are looking for? If you think "Wall Street" is going to be a savior here, you haven't been paying attention to how things operate there. Really, really naieve.>> I would expect if Iger feels the heat from da Street he will make some cuts to look like he's on top of things and can simply ride out the storm. If that includes forcing out a few execs in Orlando, Anaheim, Glendale, Burbank etc ... he's going to do that. Of course, do we really want to see Erin Wallace 'resign to spend more time' with her family only for Phil Holmes to take over the entire resort? Scary thought.
Originally Posted By -em >>If Disney had been investing and reinvesting in WDW during the past decade, they could sit back and do nothing now. But they haven't. << Agreed. People are starting to realize how thin the pixie dust is getting in some areas... >>Universal and Busch are in the process of putting billions into Orlando over a three-year period. Disney is cleaning Space Mountain and replacing its track so it doesn't have a tragedy on its hands and checks going out to next of kin, adding Obama to the HoP (too bad we couldn't have just had Bush stay for another four years, we'd all have been dead and nothing would matter), and passing off a karaoke contest at TPFKaTD-MGMS as a new major attraction when it is anything but. Oh yeah, they're also calling an eight-year old parade 'new' because they've moved some characters around, changed costumes and added some balloons.<< What you think people arnt going to come to WDW to check out the new condos?!? Deep down I think Disney is going to be in deep water in the next few years when everyone else is coming out of this recession with "new and exiting" things and Disney has a refurbed attraction and Idol... Which neither are going to bring in the people like Potter and Manta (the first more than the second) I am not a fan of the Universal brand but I am waiting for Potter and if its as good as I hope Ill prob end up with an AP... IMO Universal is playing the best game right now and while they may be struggling now they will be laughing after they get their new rides and Potter and DIsney's answer will be condos and refurbed Space...
