Marvel stock sock

Toy sale revision, fuzzy 2005 dent shares 15%

HOLLYWOOD — Reduced guidance on Spider-Man toy sales and a lack of guidance for 2005 sent Marvel stock into a tailspin Thursday. The comicbook publisher and licenser saw its share price decline 15%.

Decline came despite the fact that Marvel heftily beat its guidance for second-quarter revs and net income.

Company said in a conference call with investors that, thanks to the success of the “Spider-Man” and “X-Men” films, increasing its take from future movies will be a key priority for Marvel going forward.

“(Increased) control and greater participation in the projects are two key areas where we are seeking to make headway,” said CEO Allen Lipson. “By underscoring the value we provide in delivering proven (intellectual property), as well as the tremendous creative and production support our Marvel studio team provides, entertainment partners are increasingly acknowledging the value of that contribution in the form of improved economics.”

While the success of films and associated vidgames and toys has been driving Marvel’s success, uncertainty inherent in them is giving investors doubts.

Company declined to provide any guidance for 2005, citing the need to wait for greater visibility into next year’s theatrical release calendar and associated licensing. Currently, Marvel has New Line’s “Blade: Trinity” skedded for December release. “Elektra” and “Fantastic Four,” both for Fox, are to bow in January and July, respectively.

Still swinging

All Marvel would say about 2005 is it expects key performance drivers to be continued “Spider-Man 2” revenue, including the DVD release; “Fantastic Four” and related products; and new domestic and international licensing initiatives.

In the near term, despite the success of “Spider-Man 2,” company said overall softness in the toy market was leading it to reduce projections for toy sales related to the movie in the second half of the year to $35 million-$45 million. It previously was predicting $60 million-$70 million.

Company reorganized its joint venture with Sony to handle “Spider-Man” licensing during the quarter, taking majority control. Revenue from toy sales related to the movie contributed $11.2 million.

Toy sales were Marvel’s biggest contributor in the second quarter, however, bringing in 54% of its $155 million in net sales, while licensing revenue chipped in 32% and publishing 14%. Total revenue was up 73% from the second quarter of last year. Net income, which was affected by varying tax rates, fell 11% to $29 million.

While Marvel didn’t buy back any shares in the quarter, company said it expects to resume the practice this quarter.

But that announcement did little to allay investor concerns, as Marvel shares closed at $13.18, a nearly one-year low.

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