You will be redirected back to your article in seconds

Weak fiscal 1999 drops Disney stock

Eisner warned flat earnings ahead

NEW YORK — Shares of Walt Disney Co. plunged Friday after the company reported weak financial results, rendered no less palatable by chairman-CEO Michael Eisner’s newly minted accessibility to Wall Street.

Disney stock dropped 8% to $24.31 following news that net profit fell 30% for the 1999 fiscal year and that revenues barely budged. During his first-ever conference call with analysts and investors to discuss the numbers, released late Thursday, Eisner warned of flat earnings for the current fiscal year, meaning that no upswing is likely until sometime in 2001.

Consumer products and homevideo are the two biggest trouble spots. Costs for TV programming and production have also spiraled upward. At ABC, Disney disappointed many Wall Streeters who were hoping for a big writeoff for the network’s costly NFL package. That writeoff didn’t come.

Wait for a rebound

“Disney remains in a tough transition,” said Salomon Smith Barney analyst Jill Krutick. In a note to clients, she said the company’s stock price, even given its recent weakness, still reflects some built-in expectation that the company can successfully turn itself around. She and others seem confident that it will, although the timing of a rebound isn’t clear.

Eisner didn’t offer a drastic cure for Disney’s troubles or pull any rabbits out of his hat, as many investors had hoped. Instead, he outlined an across-the-board strategy of trimming capital spending, cutting costs and eliminating redundancies that have resulted from the company’s rapid growth in recent years. These measures should lead to some $500 million in annual savings starting in 2001. Taking a number of steps to buck up the licensing business and breathe some new life into Disney Stores, he’s also planning to unveil a new DVD-focused homevideo strategy soon.

Disney has already whittled down investment at its film studio, currently one of its most profitable operations, by $500 million.

More Biz

  • Kirk Kerkorian

    Kirk Kerkorian's Estate Settles With Widow for $12.5 Million

    The estate of late media mogul Kirk Kerkorian has a reached a settlement with his widow, who claimed she was entitled to a third of his $1.8 billion fortune. Una Davis will receive just $12.5 million under the deal, which is set for court approval on Wednesday. Davis married the mogul in March 2014, becoming [...]

  • Meg Whitman and Jeffrey Katzenberg Strictly

    Variety's Innovate Summit 2018: What We Learned

    New insights into how data collection plays a role in the tech and entertainment spheres were revealed at Variety’s annual Innovate summit held in Los Angeles on Wednesday. Meg Whitman and Jeffrey Katzenberg discussed the exciting future of television designed for mobile phone viewing with their new streaming platform, “Quibi,” an executive from “The Ellen Show” discussed the [...]

  • Capitol Music Group Names Amber Grimes

    Capitol Music Group Names Amber Grimes Senior VP of Global Creative

    Amber Grimes has been named to the newly-created position of Senior Vice President of Global Creative for Capitol Music Group, it was announced today by Chairman & CEO Steve Barnett, to whom Grimes will report. According to the announcement, in her new position, Grimes will be integrally involved in formulating and executing the company’s global [...]

  • Kevin Hart

    Why Kevin Hart's Mea Culpa Was Too Little, Too Late (Opinion)

    Forgive me if this sounds trite or preachy, but the importance of owning up to our mistakes cannot be overstated. Denials, silence, cover-ups, repudiation — all are unacceptable. Media outlets around the globe, including ours, wrote about how Kevin Hart initially took no responsibility for having posted disgusting homophobic tweets years ago that resurfaced when [...]

  • Annie Lennox, Chrissie Hynde, Industry Execs

    Annie Lennox, Chrissie Hynde, Industry Execs Sign Anti-Brexit Letter

    Annie Lennox, Chrissie Hynde, Pink Floyd’s Nick Mason, Paloma Faith, Ed Sheeran manager Stuart Camp and Grammy/Emmy award-winning film composer David Arnold and several leading UK music industry bodies are among the signees of a letter drafted by the new organization Music4EU, stating that Brexit “represents a significant threat to the UK’s music industry” and [...]

  • Kevin Hart Oscars Gay Tweet Controversy

    What Public Figures Should Learn From the Kevin Hart Oscars Debacle (Guest Column)

    When social media erupted over Kevin Hart’s anti-gay tweets from years ago, many in the media and the entertainment industry believed he would immediately apologize, LGBTQ people would critique but ultimately accept his mea culpa, and the comedian would go on to host the Academy Awards. If offenders make a commitment to do better, their [...]

More From Our Brands

Access exclusive content