Numbers Don't LieDisney ( DIS) Chairman and CEO Michael Eisner, who leads one of America's great franchises, is busily lobbying shareholders to keep his job as "Allocator-in-Chief" of Disney's capital. However, if he's talking to shareholders who understand financial statements, he has a problem. Numbers are not malleable. Parse through 10 years of Disney's financial statements and the numbers tell the cold, stark truth about Eisner's capital-allocation record:
- Nominal earnings have barely budged over a 10-year span. Annual earnings have increased from about $1.1 billion to $1.3 billion. Adjusted for inflation, there has been no growth. The capital base was $8.3 billion 10 years ago; it now stands at about $37 billion. Despite deploying four times as much capital, Disney generates roughly the same amount of nominal earnings! Debt has ballooned from $2.8 billion to $13 billion in 10 years. Revenue growth has been paltry to nonexistent (adjusted for inflation) for many years, despite the four-fold growth in the capital base.