Updated from May 12

The magic was back at

Disney

(DIS) - Get Report

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.

Parks and Resorts operating income grew 21% to $188 million. Revenue growth was due to higher theme park attendance and hotel occupancy at Walt Disney World.

Consumer products revenue grew 2% to $512 million, while operating income grew 42% to $75 million. Disney Stores cut losses with overhead savings at continuing stores and higher gross margins, as well as closures of underperforming stores.

Studio Entertainment revenue grew 16% to $2.2 billion, while operating income fell 26% to $153 million. The decline came from Disney's well-publicized theatrical motion picture weakness, offset by higher DVD sales.

The news comes at an uncertain time for the Burbank, Calif., company. Wednesday marks the first quarterly report since the

contentious annual meeting in early March when the withhold votes of an unprecedented number of dissatisfied shareholders led to Eisner's loss of his post as chairman of Disney's board.

Eisner seems to have survived the threat for now, but questions continue to swirl at the company. On the one hand, Disney is

no longer the object of an unwelcome takeover bid from cable operator

Comcast

(CMCSA) - Get Report

. Yet Eisner's tenure has lost much of its inevitability, and outsiders wonder whether Comcast lurks to strike again. Disney management forecasts growth, but investors wonder how long it can last.

For now, the company seems to be in the ascendant. Its shares rose 41 cents in early action Thursday, hitting $23.41, on the heels of the stronger-than-expected report.

"Technology and talent, that's the trick," Eisner said. "Innovation is Disney's middle name."