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Disney Shares Jump On Street-Beating Quarter

Scott Eden

Shares of Disney(DIS Quote) surged Wednesday on second-quarter earnings that beat Wall Street estimates, as investors chose to focus on the positive in a report that otherwise displayed abysmal results in the movie business and recession-diminished traffic at theme parks.

Disney shares changed hands Wednesday afternoon at $26.03, up $2.88 or 14%, on volume of 39.2 million shares, more than double the daily average.

Barclays, meanwhile, upgraded Disney to overweight from underweight, and hiked its price target on the stock to $32 from $17, arguing that the company is better positioned than its peers to reap the rewards of the ongoing digital evolution of the media business.

That didn't help Disney in the second quarter, at least.

After the bell on Tuesday, the company said net income plummeted 44% to $613 million from $1.13 billion last year. Quarterly earnings on a per-share basis, however, and excluding charges, came in three pennies above analysts' estimates of 40 cents.

Disney said its revenue fell 7% to $8.1 billion from $8.7 billion a year ago.

The company's results were hurt most by its movie division, where revenue tumbled 21% year-over-year. Declining DVD sales, an industry bugaboo, and a slate of disappointing theatrical releases served to hurt results at the studio. Operating income was decimated, falling 97% to $13 million on rising production expenses for films not yet released.

Theme parks and resorts also performed relatively poorly, with revenue sliding 12% to $2.4 billion from $2.73 billion a year ago -- declines the company attributed to decreased spending by guests on merchandise and a cut in the price of tickets at Disneyland during the quarter.

The company's biggest segment by revenue -- media networks -- eeked out year-over-year growth of 2%, rising to $3.62 billion from $3.55 billion. The company cited higher affiliate revenue at ESPN, ABC Family and the domestic Disney Channel, which offset a decline in advertising revenue.

Shares of other entertainment and media concerns rose Wednesday: Viacom(VIA Quote) stock climbed nearly 6%, Time Warner(TWX Quote) was up 2%, and News Corp.(NWS Quote) gained 6%.