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Sunday, 05/06/2001

DIS - Walt Disney Co.

Company Description

The Walt Disney Company (NYSE:DIS) is a diversified worldwide entertainment company with operations in five business segments: Media Networks, Studio Entertainment, Parks & Resorts, Consumer Products and the Internet Group.

The company operates the ABC Television Network, which has 225 affiliated stations operating under long-term agreements reaching 99.9% of all United States television households. The company owns the Disney Channel, Toon Disney, SoapNet, 80% of ESPN, 37.5 % of the A&E Television Networks, 50% of Lifetime Entertainment Servies and 39.6% of E! Entertainment Television, among various other investments.

The Studio Entertainment segment produces live-action and animated motion pictures, television animation programs, musical recordings and live stage plays. The Walt Disney World Resort includes four theme parks: the Magic Kingdom, Epcot, Disney-MGM Studios and Disney's Animal Kingdom. The Consumer Products segment licenses the Company's characters and other intellectual property for use in connection with merchandise and publications. And the Internet media business develops, publishes and distributes content for online services intended to appeal to broad consumer interest in sports, news, family and entertainment.

(source: Walt Disney)

Reasons To Invest

Disney's diverse product line and mix of business helps to insulate the company from an economic downturn, such as the one the U.S. economy is currently experiencing. For example, the company's theme park division has remained relatively stable as demand for entertainment has remained relatively firm despite the economic woes.

Additionally, Disney is reorganizing several of its divisions in an attempt to bolster its bottom-line, along with taking other cost cutting steps. Currently, the firm is reorganizing its consumer products division, which accounted for roughly $90 million in profits during the last quarter. The company closed over 70 Disney stores last quarter, that were unprofitable, in another attempt to trim costs and laid off some 4,000 employees. While the thought of lay-offs is obviously disconcerting, it is another sign that Disney is serious about delivering future earnings growth.

Because of its cost cutting efforts, Disney increased operating income by 14 percent last quarter, to $1 billion or 19 cents per share. Analysts had expected the company to earn 13 cents a share. Although sales slumped by 4 percent during the period, Disney managed to grow earnings, which pleased Wall Street.

Further, just last week, Disney announced that it would consolidate its Internet assets in an attempt to streamline operations, along with launching a revamped ABC.com Web site.

Disney is attempting to boost its bottom-line and Wall Street is receiving the efforts of the company well judging by the recent behavior of its share price. The stock had been trading in a sideways fashion since late last fall before advancing over the past month. In early April, shares of Disney bounced off the $26 level for the second time, en route to tracing the widely accepted double-bottom chart pattern. These types of patterns, especially over a lengthy period of time, are often indicative of a sound base from which a stock can rally for an extended period of time. As such, we favor the technical position of Disney and feel that it is a good candidate for long-term investment purposes at current levels.

DRIP Information:

Shares to Qualify = 10           Accept Foreign Accounts: Yes
Auto-reinvestment  = Yes         Temper Enrollment Serv:  Yes

Min/Max Investment = $100 to $250,000/year
Reinvestment Fees: 
Dividend: 0         Cash: $5 + 3c/sh        Auto ReInvest: $1

Transfer Agent:

Walt Disney Co.

1-818-553-7200


Industry Group:      Recreation   52-week high=$43.88
Annual Dividend Per Share=$0.21   52-week low =$26.00
Last earnings 04/15    est=0.13   actual=0.19
Next earnings 07-18    est=0.23   versus=0.25
                                  P/E = 39
Analyst Ratings:
Strong Buy    = 9
Moderate Buy  = 6
Hold          = 4
Moderate Sell = 0
Strong Sell   = 0

 
 

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