Originally Posted By SuperDry <<< believe the boys at Enron had some thoughts on the matter. Really, though (and I, too, would like to hear SD's take on things), it comes down to CEO's getting paid exhorbitant bonuses that come attached to lofty expectations that are near impossible to provide quarter after quarter. There is one company that I've been watching that has attached almost all it's CEO bonus monies to the stock price rising to $18 (it's at $10 and change now, was $7 2 months ago) and staying there for 90 days. ... I think that if dividends were more in favor, things would improve. >>> I didn't see your post until after I posted mine, but you basically took the words right out of my mouth! I could go on ad nauseum on this subject, but I don't want to burden LP with a series of long SD posts
Originally Posted By Mr X ***you basically took the words right out of my mouth*** Well, where do you think I learned all that crap? Exactly! Reading lots of long posts by SuperDry. So, keep it up. Heck, 6 months ago I didn't know what a PPS was! Rich, those are good points as well. And, to add to SD's "rock and a hard place" theory, when the companies (not just Disney, but a LOT of customer oriented ones) do throw a lot of money back in and then, for whatever external reason, lose customers...we're back to bitching stockholders who are asking why the company "wasted all that money". Catch 22.
Originally Posted By Mr X For the record, that does not excuse cheap, sucky, lame parks like DCA or WDSP or, ugh, HongKong Disneyland.
Originally Posted By mrichmondj Unfortunately, it doesn't excuse expensive and financially troubled parks like DLP either. Catch 22 is right.
Originally Posted By SuperDry <<< The dividend model doesn't work very well for Disney -- at least for the parks business. When you look at the corporate earnings report, you see that Disney regularly reinvests nearly all or more than all of their operating profits into new capital expenditures for theme parks. These capital expenditures include building new parks, new hotels, and the major rehabs on attractions. >>> There's one big hole in your argument: stock repurchase. In addition to the cash earnings reinvested in the parks instead of borrowed money, a large amount of money is used for stock repurchase. Here's a quote from a press release from Jan 2006: "Separately, the Disney Board approved the repurchase of approximately 225 million additional shares, bringing the Company's total available authorization to 400 million shares. Since August 2004 through the end of December 2005, Disney has invested nearly $4 billion to purchase nearly 155 million shares." So, in just 1.5 years, nearly $4B was used for stock repurchase. Compare this number to what you mentioned regarding capital expenditures in the park. (Yes, I realize that the stock repurchase money came from all divisions of TWDC, but if you take that into accoount, the reinvestment in the parks is in the same ballpark as the stock repurchase plan) <<< Disney anticipates further significant share repurchases going forward, reflecting Disney's continued commitment to returning value to shareholders over time. >>> The theory behind stock repurchase plans(which only really came into vogue in the 90's from my understanding) is that they reduce the number of outstanding public shares, thus making each remaining share's portion of the company slightly larger. Think of reducing the number if slices in a pie before it's cut - the pieces are a bit bigger if there are fewer slices. Many shareholders much prefer this over dividend payouts, since they turn what would have been ordinary income (until recently there was no preferential treatment for dividend income) into capital gains, and more importantly, the gain remains unrealized (and therefore untaxed) until the shares are sold. Both of these problems are solved if there were to be no taxes on dividends. Such a suggestion is way oversimplifying things, but I'm using it as an example of what's wrong with the current system and how it drives companies to do some of the things they do.
Originally Posted By Mr X ***Unfortunately, it doesn't excuse expensive and financially troubled parks like DLP either.*** Well, for the stockholders maybe (IF they are thinking short term), but for us customers it's great. And, sparing no expense like that can lead to lifetime customer loyalty, and you can't put a pricetag on that!
Originally Posted By Mr X Geez Louiz!!!! Sorry for the OT, but hey SD, Baidu is now a whopping $125.80AH!!!!!!! :O
Originally Posted By mrichmondj I agree that stock repurchase programs are a symptom of the drive towards increasing share prices and earnings per share. They also unfairly benefit those that receive stock options as part of executive compensation plans, since the options only gain in value when shares increase. However, I still think you have to look at the earnings in the theme parks businesses alone and compare that to the capital expenditures required in that particular segment. Across all segments, Disney made a lot more money in 2006 from purchasing their own shares and the appreciation in price there than they did from building new parks in Hong Kong or anywhere else. Not what you want to hear as a parks enthusiast, but if you are looking to get the best return on your dollar, stock repurchase may have been the best place to distribute that excess cash flow from other businesses. It also reflects how Disney redistributes one-time gains from the sale of businesses, e.g. Disney Stores, and puts the proceeds from those sales into their own stock rather than holding cash.
Originally Posted By SuperDry <<< Sorry for the OT, but hey SD, Baidu is now a whopping $125.80AH!!!!!!! :O >>> Why did I listen to your bad advice about NOT buying Baidu because it was too high and not listen to your good advice about how great Baidu was?
Originally Posted By SuperDry <<< Across all segments, Disney made a lot more money in 2006 from purchasing their own shares and the appreciation in price there than they did from building new parks in Hong Kong or anywhere else. >>> The money they "made" based on their own stock appreciation due to the share repurchase is totally phantom money - in order to realize the gain, they'd have to sell the shares, which would just convert the asset back to cash and in the process redilute the publicly traded shares.
Originally Posted By Mr X ***Why did I listen to your bad advice about NOT buying Baidu because it was too high and not listen to your good advice about how great Baidu was?*** Exactly. What a run...something about a deal with Microsoft and entering the Japanese market next year. Time to short. Sorry folks, back to your regularly scheduled topic.
Originally Posted By Spirit of 74 I've debated ad nauseum about the inherent folly of making every theme park creative/financial decision based strictly on the short-term stock price, so I'm going to steer clear this time on that front. Just want to address a few points here. DLP wasn't a financial disaster because they built a true MK for the 21st century. Overbuilding resorts, not taking into account local culture/tastes and opening during a recession ... those are the reasons DLP struggled. I just love hearing the apologist argument that Disney just must build (expletive deleted) 1/2 day parks because ... gasp ... that's the only thing the stockholders and Wall Street will allow. Trippy, Univeral does indeed sell one-day, one park tickets, although I wouldn't advise buying one. When you can buy an AP for $99, it makes no sense to spend $65-70 for a one-day. And, if you've never been, both Universal parks are well worth a visit. Finally, to get back on the original topic ... I'll only say that the columnist in question is a very big Disney fan. I've never read anything remotely negative from him. He loves Mission Space and Test Track and such. The paper has had more of a realistic viewpoint of the Mouse the past few years and I'm sure the Mouse greatly enjoyed reading him bash Universal. And while I agree that Universal is getting stale ... so is Disney. As a matter of fact, I just noticed that in their latest press releases Disney talks about all the FRESH new offerings ... I find the wording very telling when I have been using the word STALE to talk about WDW's product for quite a while and then Al Lutz's uses it prominently to talk about his recent visit. Still, reactionary ... they'll never learn.
Originally Posted By RoadTrip Spirit... As you will read in another post I made in this section; we've been to Universal Studios quite a few times before and have really enjoyed it. It just kind of irritated me to think that USF was now forcing everyone to buy a two-park ticket whether they wanted it or not. I wouldn't mind a two-park ticket for myself, but I know my wife wouldn't go on one attraction at IOA. Oh well... if the price differential isn't that much maybe she would just want to see what the place looked like while I rode a few coasters.
Originally Posted By DouglasDubh <And, if you've never been, both Universal parks are well worth a visit.> If your wife likes Star Tours, she should like Spiderman. It's a great ride. If she likes Splash, then Dudley Doorights and Jurasic Park are good. If she likes Kali or Grizzly River, then she should like Bluto's Rafts. Plus the Poseidon thing is pretty cool, and Cat in the Hat is a nice dark ride. A fan of theme parks should find a lot to do for a day in IOA.
Originally Posted By Spirit of 74 <<Spirit... As you will read in another post I made in this section; we've been to Universal Studios quite a few times before and have really enjoyed it. It just kind of irritated me to think that USF was now forcing everyone to buy a two-park ticket whether they wanted it or not.>> Sorry, Trippy. I missed that when I read it as I was busy getting my rant on against Disney management ;-) But, Uni does have one-day tix ... they hide them much like WDW and DL do because they obviously want you for more than a day. <<I wouldn't mind a two-park ticket for myself, but I know my wife wouldn't go on one attraction at IOA. Oh well... if the price differential isn't that much maybe she would just want to see what the place looked like while I rode a few coasters.>> That's a shame. IOA has loads of great attractions and only two coasters (three if you count each Dueling Dragon separately, which I don't). I can't imagine her not enjoying much of what's there unless she doesn't do any kind of rides whatsoever.
Originally Posted By DouglasDubh <IOA has loads of great attractions and only two coasters (three if you count each Dueling Dragon separately, which I don't).> The Unicorn ride is a coaster. More of a kiddie one, but still a coaster.
Originally Posted By Spirit of 74 Yep. Forgot that. But I put that on par with the Barnstormer at the MK. I think I've been on it twice when it first opened.
Originally Posted By RoadTrip <<If your wife likes Star Tours, she should like Spiderman. It's a great ride.>> My wife would never consider going on Star Tours. <<If she likes Splash, then Dudley Doorights and Jurasic Park are good.>> My wife would never consider going on Splash (my God -- two bad things; drop AND wet). <<If she likes Kali or Grizzly River, then she should like Bluto's Rafts.>> Not a chance. Again drop and wet. <<Plus the Poseidon thing is pretty cool, and Cat in the Hat is a nice dark ride.>> I don't know what Poseidon is, but my wife would never go on anything named after a ship in the water upside down. Once again, drop and wet. ;-) If the Cat in the Hat dark ride does not spin you, drop you or get you wet she would probably go on it. You may have finally found a winner. <<A fan of theme parks should find a lot to do for a day in IOA.>> My wife is not a fan of theme parks. She is a fan of Disney Parks. She likes stuff like Peter Pan, Pirates, Haunted Mansion, Great Movie Ride, Spaceship Earth, Kilimanjaro Safaris, etc. When we go to our local Cedar Fair Park she spends pretty much the whole day walking around while I do the attractions. She likes a couple of the shows, the Antique Cars, the Bumper Cars, the Train and the fireworks at the end of the evening during the summer. That's pretty much it.
