Walt Disney Co. (DIS:US) fell the most in more than a month after Chief Financial Officer Jay Rasulo tempered expectations for the current quarter, citing film marketing costs and tough comparisons with a year earlier.
Shares of Disney, based in Burbank, California, declined (DIS:US) 2.4 percent to $64.65 at the close in New York, the most since April 15. The stock has gained 30 percent this year.
Rasulo, speaking at a Nomura Securities investor conference, said he was reiterating and elaborating on comments made earlier this month that the company’s film studio and theme parks would be up against tough year-over-year comparisons (DIS:US) in the current fiscal third quarter.
“When I’m looking at estimates (DIS:US)across the Street, maybe I wasn’t clear or they weren’t properly reflected,” Rasulo said.
Disney will incur significant marketing costs for “The Lone Ranger” this quarter, while revenue from the film won’t start to flow until July 3, after the period ends, he said. “Iron Man 3,” while collecting about $1.2 billion at the worldwide box office, will fall short of “Marvel’s The Avengers” from last year, he said.
Those items will lower operating income at the film unit by about $150 million from a year earlier, Rasulo said. In addition, cable-sports channel ESPN will recognize about $75 million less in deferred revenue for the period than a year ago, he said.
Theme-park results will reflect one less week of Easter holiday traffic, compared with the same period last year, Rasulo said. The company won’t get the same earnings boost from the new cruise ship Fantasy as it did a year earlier because the ship has now been operating for more than a year.
Analysts predict Disney will earn $1.05 a share this quarter excluding items, the average of 29 estimates (DIS:US) compiled by Bloomberg. They forecast sales of $11.8 billion.
Rasulo said the company’s acquisition (DIS:US) strategy is focused on film franchises that lead to business for other Disney units. The 2006 purchase of the Pixar animation studio led to the “Cars” movies, which translated into toys and theme-park attractions. Marvel Entertainment brought “Iron Man 3” and “The Avengers,” which is now being spun off into a television show.
“This is how we like to allocate our capital,” he said.
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