SMH Capital, which does Institutional Equity Research out of Houston Texas, had an interesting take on the Mouse House in its "Morning Meeting Notes" today:
• DIS will release FQ2 results after the close today. We are projecting aggregate revenue of $8.26 billion, segment EBIT of $1.55 billion, and core EPS of $0.38, which at one point was well ahead of the Street but is now in line with consensus.
Consensus on the FQ2 revenue line is $8.12 billion.
• Analysts will look to CEO Bob Iger for any update on possible changes within Disney’s animation unit. The recent underperformance of “Meet the Robinsons” suggests that further changes may be pending regarding Disney’s animated film slate, including leadership personnel, storyboard personnel, and/or the composition of films in the pipeline.
Note to SMH: the changes about which you speculate have happened already.
Meet the Robinsons, underperformer or not, was mostly the product of the previous animation regime. Sure, Lasseter-Catmull made changes, but the picture was what the picture was going to be prior to their arrival.
The company has placed animation near the center of its corporate existence. Disney, after all, just paid a lot of money to buy Pixar and import Pixar's management -- both creative and administrative -- into Disney Feature Animation. And one picture that fails to kiss a $200 million domestic gross is not going to change the basic plan.
So. I understand where the stock analysts at SMH are coming from, but I think they are wrong. The animation shake-up happened already. Restructuring has already occurred (mostly). That's why the "changes may be pending" meme is incorrect.
The Day After: And now Disney's release of second quarter earnings is out, and it's 37 cents instead of the consensus 38. (Egads!) So the stock is like, sagging:
With less than a half hour before the opening bell will sound, Walt Disney (DIS: View sentiment for DISsentiment, chart, options) shares have moved more than 2% lower, slipping beneath the 36 level as investors react to the entertainment conglomerate's latest earnings report.
Tuesday night, DIS reported second-quarter net income of $931 million, or 44 cents per share, 27% higher than the $733 million, or 37 cents per share, reported in the year-ago period. Sales at The Mouse totaled $8.07 billion compared to last year's $8.03 billion. The Street was looking for earnings of 38 cents per share on sales of $8.13 billion. Investors, as reported by Whisper Number.com, were also expecting per-share results of 38 cents. To sum up: per-share earnings were comfortably above the Street's average view, while revenue fell short of the mark.
So I guess now we need to see how Pirates and Ratatouille perform, yes?
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11 comments:
I think we are far from seeing the last of the Disney changes. Disney is still struggling to find itself in the wake of the past 5 years of downslide, the Pixar guys have a huge task still ahead of them.
Do you really think if the overhaul to MTR didnt happen the numbers would be any different than the 90M?
I dont think so. same thing happen with Kingdom of the Sun (Emperors New Groove) completely different films before the overhaul. but the numbers I dont think would of been much different in the end. - 89M
I do want to see MTR and I guess I should hurry up.
Obviously, the” underperforming” of MTR was something planned, giving it a terrible marketing and a worst release date, trying to justify the Pixar purchase. I love the way that Pixar works, but we are not idiots.
same thing happen with Kingdom of the Sun (Emperors New Groove) completely different films before the overhaul. but the numbers I dont think would of been much different in the end. - 89M
Emperor's New Groove is an interesting example. Opened on the weak side, but then went up 50% in its second weekend.
That's pretty much unheard of.
Let's face it: there are good pictures that fail to perform -- for any number of reasons -- and bad pictures that are blockbusters.
I'm not smart enough to know if Picture A would have performed differently if Picture A had been different. That goes under the heading of "Unprovable Hypothesis."
"Obviously, the” underperforming” of MTR was something planned, giving it a terrible marketing and a worst release date, trying to justify the Pixar purchase. I love the way that Pixar works, but we are not idiots."
No, but you ARE paranoid. To think Disney would want a film of theirs to "underperform" is just plain silly. Especially to "justify the Pixar purchase." One had nothing to do with the other. How ridiculous.
It's not that Disney "wanted" the film to underperform, but they DID make a choice to concentrate their advertising and marketing budget on 'Ratatoille' in order to better justify the $7 billion purchase of Pixar. How do I know? Bob Iger said so directly and explicitly on a conference call to shareholders and media. He explained the strategy simply and directly.
The mishandled marketing for MTR really showed. Everyone I know had a completely erroneous perception of what the film would be about, based on the awful commercials showing a dancing dinosaur. MTR is a drama, not a comedy, but you'd never know that from the anemic marketing. There was not a single dancing dinosaur in the entire movie, but what little advertising was given to MTR simply enforced that ridiculous notion.
MTR is not a perfect film, but it certainly deserved better. Ratatouille, from what little I've seen, looks really awesome, AND it will have an immense, saturation-level advertising effort behind it.
I agree with you absolutely (anonymous number three), thank you. And after a “failure” the company will have a “complete freedom”… taking decisions, and getting total support, and proving that the “Pixar’s magic touch” IS necessary from the beginning.
Oh, please!
Then how do explain the way Disney scuttled "Treasure Planet" and "Brother Bear?"
They wanted underperforming 2D features to fit their corporate agenda.
Let's not forget "Home On The Range", Floyd. It was the last 2D feature out of WDFA.
I don't think any studio, especially Disney Feature animation expects their film to 'underperform'. lets not forget that MTR was the best thing Disney had in the pipeline for the past 4 years.
I'm sure Disney was not expecting it to do so low nor wanted it to fall short of a blockbuster.
I will definitely rent it when it goes to DVD.
Floyd, its hard to explain the release date for Brother Bear. what studio in their right minds would release a film they just spent serious time and money to make, by putting it in theaters on a SATURDAY?!
The studio claimed it was because that Friday was Halloween. what animation or disney geeks aren't done with their candy by 7Pm to go see a movie?
It was a very strange release schedule for the Florida film.
...How to explain you?...mmm :
Brother Bear on Saturday= Goodbye WDFA Florida!
“On April two bust a moo”= Goodbye hand-drawn animation!
I would like to see a Pixar film fighting with this, and being successful...;)
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