Thursday, August 08, 2013

Profit Margins!!

Older story, but the reporter (Chris Palmeri) just sent it to me.

Walt Disney Co. is eliminating perks including executive car allowances as the world’s biggest entertainment company looks to further boost profitability.

“We’re phasing them out,” Chief Financial Officer Jay Rasulo said of the car allowances in an interview at last week’s Allen & Co. conference in Sun Valley, Idaho.

Disney has been reducing costs by firing hundreds of workers, closing offices and outsourcing duties like video-game development as it looks to widen profit margins (DIS:US) and extend a more than doubling of the stock price in the past five years. Rasulo, who has been conducting a company-wide review of expenses, said he’s seeking to modernize operations at Burbank, California-based Disney. ...

Operating margin (DIS:US), a measure of profitability, widened to 21 percent of sales in the most recent fiscal year from 13 percent in fiscal 2005, according to data compiled by Bloomberg. ...

I talked to Mr. Palmeri about Diz animation doing some down-sizing. Cutting staff and outsourcing is a time-honored device for widening profits. Disney is traveling the time-honored road.

The Mouse is not only laying off Burbank animation staff that they consider to be under-utilized, but they are outsourcing television animation to small, L.A.-based studios, and releasing a CG theatrical tomorrow that cost in the neighborhood of $50 million because much of it was done in India. (The movie began life as a direct-to-video feature.)


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