Disney's (DIS) board has said that management is on the right track.But, as one may be reminded by Disney's recent setbacks, the company's directors have scrupulously avoided saying when they expect Disney's metaphorical train to reach its destination. That leaves investors wondering how bad present and future disappointments will have to get at Disney before Michael Eisner, who last month exited his post as Disney's board chairman, loses his remaining responsibilities as CEO. And certainly, Wall Street has high-profile disappointments to consider, including two weak movie releases in two weeks and continuing uncertainty at the company's ABC television network as the upfront ad-selling season approaches. Now the question is how soon the negatives will be offset by tangible pluses, and when critics of the company will stop piling on. On Monday, Disney's shares fell 55 cents, to $25.70, down nearly 10% from the 52-week high the stock hit in February after disclosure of Comcast's ( CMCSA) unsolicited bid for the media and entertainment conglomerate.
Disney's failure at the box office, opines Greenfield, will counterintuitively result in near-term gain in Disney's stock, since shareholders may wishfully think the movie problems will result in more-than-token management change and give Comcast's bid some greater chance of success. Greenfield has a neutral rating on Disney; his firm hasn't done banking for the company. Schwab SoundView analyst Jordan Rohan says he expects Disney to take an $80 million impairment charge for The Alamo in the March quarter. (Like Greenfield, he believes that the charge, under proper accounting principles, will come in the first calendar quarter, despite the movie's release in the second.) Adding that to Rohan's expectation of a $70 million combined charge for Home on the Range and The Ladykillers, but offsetting it with the performance of Finding Nemo on home video, Rohan is cutting 3 cents from his first-quarter earnings estimate for the company. Rohan has an outperform rating on the stock and a $31 price target; his firm hasn't done banking for Disney.