DIS Preview: Great Export Story Coming to an End?

Tinker Bell can spread her pixie dust all over Disney (DIS - commentary - Cramer's Take), but that will not allay the concerns of investors over the near-term outlook for this media/travel behemoth. Even good earnings may not ease the tension.

Analysts are looking for 49 cents of EPS on $9.35 billion of sales when Disney reports after the bell. Disney is a great export story -- remember, foreign visitors to the U.S. parks are exports -- but with the U.S. dollar on a tear since its July nadir, that story arc may be concluding. With the euro down 25% and their own economy in a shambles, Europeans are no longer unloading in Orlando in huge numbers.

In any case, with 2008 nearly done, investors are turning their attention to 2009 and the question of how well Disney will weather the recession. The business is far more stable than in the past. With half of cash flow coming from subscription-driven cable networks, for instance, there is cushion to offset the natural operating leverage in theme parks and films. If attendance declines 10% at the parks, operating profit could be down 20%; broadcasting revenue down 10% will result in profits down 30%. Studio entertainment faces tough comps, too, especially in home video, and very little is being revealed about upcoming Pixar flick "Up."

On the call, analysts will seek insight on the call into ESPN advertising trends and theme park/ABC cost-cutting initiatives. Naturally, sports advertising is driven mainly by cars and beer, two industries that may be quite willing to look for their own cost savings in the advertising line. The Hong Kong and Paris parks are seeing much higher marketing expenses due to new attractions, which may have to come back in line. Investors will also wonder what consumer products can contribute, since retail weakness could be offset by more video games and momentum in the Hannah Montana, Jonas Brothers and High School Musical franchises.

The call starts at 4:30 p.m. EST.

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At the time of publication, Dvorchak had no positions in the stocks mentioned, although positions can change at any time.

Gary Dvorchak is a managing partner of Aviance Capital Management, a Sarasota, Fla.-based institutional asset manager that manages $200 million in growth and value equities and fixed income. Dvorchak holds a master's degree in business administration from Northwestern University and a bachelor's degree in computer science from the University of Iowa.