Disney Rolls Past Targets

Updated from May 12

The magic was back at Disney (DIS Quote - Cramer on DIS - Stock Picks) in the latest quarter.

The beleaguered media giant, seeking to shake off a raft of controversies besetting it this spring, shot past Wall Street's second-quarter earnings estimates Wednesday and raised its 2004 guidance. Disney shares rose 2% in early action Thursday.

For the fiscal second quarter, ended March 31, earnings surged to $537 million, or 26 cents a share, from the year-ago $314 million, or 15 cents a share. Revenue jumped 11% to $7.19 billion from $6.5 billion a year earlier.

Analysts surveyed by Thomson First Call had forecast earnings of 21 cents a share on revenue of $6.92 billion.

Despite latest-quarter weakness at ABC and in recent motion picture releases, "the company's earnings continue to grow impressively," CEO Michael Eisner said on a conference call Wednesday. "As the economy improves, we are seeing commensurate improvement in most of our businesses."

Disney, which had previously forecast earnings growth of 40% for the fiscal year ending Sept. 30, raised that forecast to 50%, or 98 cents per share. That finally puts Disney's forecast in line with analysts' expectations, which Thomson First Call had already placed at 98 cents.

Operating income for the quarter was $963 million, ahead of the First Call consensus of $952 million.

One of the chief drivers of the quarter's success was the company's media networks business, which reported 76% operating income growth to $704 million. The company cited higher affiliate revenue at ESPN, higher broadcasting ad rates and the absence of the costly Super Bowl this quarter.