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Technology Stocks : Walt Disney -- Ignore unavailable to you. Want to Upgrade?

To: angra manyu who wrote (1627)	5/3/1999 9:27:00 PM
From: Maverick	Read Replies (2) \| Respond to of 2222

Disney Co. Faces Variety of Woes By MICHAEL WHITE AP Business Writer LOS ANGELES (AP) -- Sluggish stock, weak earnings and the prospect of a bleak summer movie season hound the Walt Disney Co. as chairman Michael Eisner prepares to testify in what may be the most dramatic Disney tale of the year: a high-profile legal fight with the company's former studio chief, Jeffrey Katzenberg. Eisner is scheduled to take the stand Tuesday in a trial to determine how much money Disney must pay Katzenberg for projects he coordinated during a decade at Disney before quitting in an angry huff over Eisner's refusal to promote him. The trial is expected to reveal details about Eisner's souring relationship with one of his top lieutenants. Katzenberg claims Disney owes him $250 million for films and other products he developed before leaving the company in 1994. The trial and a big payout to Katzenberg wouldn't be the first, or worst, news for Disney in recent months. As the bull market has continued to rage, Disney stock has been a conspicuous underachiever. Earnings fell 26 percent to $296 million in the company's second fiscal quarter. And Disney's stock market performance has turned dismal. Disney stock is down 29 percent over the past year and lags behind the S&P 500 and key rivals such as Time Warner, whose share price has increased more than 60 percent in 12 months. Monday, while the Dow Jones industrial average raced ahead 225.65 points to top 11,000 for the first time, Disney stock slipped 50 cents to close at $31.25 on the New York Stock Exchange. Disney also faces the prospect of its new animated feature ''Tarzan,'' being eclipsed by the summer's preordained blockbuster, ''Star Wars: Episode I -- The Phantom Menace.'' Already, ''Tarzan'' merchandise is getting a lukewarm response from retailers who instead are stocking up on toys tied to ''Star Wars.'' ''There are so many different things going on, it's difficult to point to one issue and say this is the exact problem with Disney,'' said Linda Bannister, an analyst with Edward Jones. ''I think Disney will get a handle on everything. The question is when? We thought this was going to be the last quarter of difficult comparisons. Now it appears we are going to have a few more quarters of difficulties with Disney,'' she said. A Disney spokesman declined to comment, citing the company's policy of not discussing its stock price. But Disney did outline its woes in its most recent earnings report. Earnings have been hurt by big investments in new ventures, such as Disney cruise lines and the Internet portal Infoseek. The company also has suffered from weaknesses in home video sales and merchandising and licensing. Sales at Disney Stores have suffered double-digit declines in recent months. Another problem has been the high cost of sports programming for the ABC and ESPN television networks. Finally, there is the prospect of increased competition in the theme park business from Seagram Univeral's new Islands of Adventure park scheduled to open this month near Walt Disney World. In the report, the company warned investors the company faced several more quarters of lackluster earnings. ''Disney faces a clear challenge in pulling itself out of its near-term projected earnings trough,'' Merrill Lynch analyst Jessica Reif Cohen wrote in a recent report. Yet analysts believe Disney -- perhaps the world's best-known business brand -- still looks good over the long haul. The company's investment in Infoseek is widely expected to strengthen Disney's position in electronic commerce. Advertising revenues from television and radio broadcasting were up in the most recent quarter, operating profits from Disney theme parks remained strong and the Disney cruise line was expected to begin making money over the next two years. To enhance the appeal of its home video line, Disney plans to slow the release cycle of its classic videos from every seven years to 10. The company also is hoping its home sales effort -- a profit engine during much of the past decade -- will get a big boost as consumers switch from video cassettes to new DVD players. The company also expects to make money on ''Tarzan,'' slated for release more than a month after ''Star Wars'' opens May 19. Meanwhile, Disney is implementing a cost-cutting program designed to curtail ballooning costs of film production and other ventures. ''Disney's assets just have a lot of value,'' Bannister said. ''A lot of people still go to Disney World. People still go to Disney movies and people buy Disney videos for their children. The strength of Disney's brand does mean a lot.''