Simon Says: Goldman Analyst Lowers Disney's Rating, Estimates
Goldman Sachs
analyst Richard Simon dropped
Walt Disney
(DIS) - Get Report
from the firm's recommended list and lowered his fiscal 2002 earnings estimates, citing a continuing decline in advertising revenue from the company's television networks.
Thanks to "unexciting earnings momentum" for the next year (Disney is set to post its third-quarter earnings on July 30), Simon cut his 2002 earnings projection to 84 cents a share from his prior forecast of 95 cents a share. According to
Thomson Financial/First Call
, analysts expect earnings of 94 cents a share for fiscal 2002.
The revisions are based on "expected poor upfront performance," Simon wrote in a research note, indicating that network television revenue could decline more than $850 million compared with last year because of a continued weak advertising market.
The analyst said Disney could post an operating loss of $285 million next year, well below Simon's prior expected operating profit of $102 million.
Simon didn't change his estimates for the studio entertainment or theme park divisions, citing high expectations for Disney's upcoming
Monsters Inc.
movie and the revenue brought in by the critically disappointing
Pearl Harbor
. The
Monsters Inc.
movie is one of a handful of catalysts that Simon expects to push studio entertainment earnings 30% higher in 2002. Simon remains concerned about the weak economy's possible effect on Disney's theme parks.
Last week, Peter Schneider, the head of Disney's film and television studios, announced his resignation. Additionally, Disney recently started laying off nearly 4,000 employees, or 3% of its workforce.