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May 17, 2010 - Walt Disney Company (DIS-NYSE) together with its subsidiaries, operates as an entertainment company worldwide. The company's Media Networks segment includes domestic broadcast television network, television production and distribution operations, domestic television stations, cable networks, domestic broadcast radio networks and stations, and publishing and digital operations. It operates the ABC Television Network and 10 owned television stations, the ESPN Radio and Radio Disney networks, and 46 owned radio stations. This segment also produces, licenses, and distributes cable and animated television programming; and operates ABC-, ESPN-, ABC Family-, SOAPnet-, and Disney-branded Internet Website businesses, as well as Club Penguin, an online virtual world for kids.

Its Studio Entertainment segment produces and acquires live-action and animated motion pictures, direct-to-video programming, musical recordings, and live stage plays.

The company's Consumer Products segment licenses Disney characters, and visual and literary properties to manufacturers, retailers, show promoters, and publishers; and publishes books and magazines.

Its Disney Interactive Media Group segment creates and delivers Disney-branded entertainment and lifestyle content across interactive media platforms. The company was founded in1923 and is based in Burbank, California.

And you thought Disney was all about Mickey Mouse. There's nothing Mickey Mouse (except for Mickey) about this operation. And after a small decrease in revenues in 2009 (going from $37.843 billion in 2008 to $36.149 billion) and a steeper drop in earnings (down to $1.82 from $2.26), it looks like the mouse is about to come roaring back.

The news was met with mixed affection. First the stock went down, then up, then down. Some investors worried about the media networks division where income was flat on a sales gain of 6%. The broadcasting goup's income dropped by 24% because of lower primetime and news ad sales. The company's parks diviison had a 2% gain in revenue but a 12% drop in income. Disney said higher fuel costs and promotions on its Cruise Line were the reasons. Further, the CFO said reservations at Disney's parks were down 10%. He thought the reason was because prices were going higher. Disney Chief Executive Robert Iger added, however, that the company raised its hotel rates closer to normal levels and in the past week has seen stronger bookings, which he said was an encouraging sign.

An analyst at Deutsche Bank also had some encouraging words: "Overall, underlying trends appear quite strong, and we would takeadvantage of any overreaction to headline data points like second-quarter cable net cost growth or -10% in third-quarter hotel bookings," he wrote. "While management did indicate park hotel bookings are down 10% quarter to date, this is partly holiday timing and bookings flow, and June should actually end up flattish for park revenue year-over-year, given higher pricing and improving international business." Citi analyst Jason Bazinet upgraded Disney shares to "hold" from "sell"and raised his target price to $37 a share, lower than most analyst projections. Disney's strong studio results, aided by nearly $1 billionin worldwide grosses for "Alice," helped sway Bazinet away from earlier, more dire predictions.

Disney has a full schedule of new films coming, with some of them certain to be hits. First up is Prince of Persia. Then Toy Story 3, Sorcerer's Apprentice, and currently in theatres with strong box office Iron Man 2. Next fiscal year, the cash cow franchise of Pirates of the Caribbean will be released as well as Tron.

Next year, in the fall, Disney opens a Hawaiian resort as part of the effort to rejuvenate sales in the Parks and Resorts division. But consumers are still reeling from the economic slowdown, looking for top value in their entertainment dollar. While attendance at the parks has been increasing, so have the discounted tickets. And concession sales in the park are down. As the economy revives, expect this division to contribute more to the top and bottom lines.

More numbers: Trailing P/E is 17.85 while the Forward P/E is 14.57. Price to sales ratio is 1.73. Price to book is 1.7. Book value is $20.05.
Operating margin for the last 12 months was 16.64% while Profit margin was 9.91%. Return on equity was 10.31% and Return on assets was 5.80%. There's $3.08 billion in cash or $1.65 a share. Total debt is $13.24 billion or 23% of capital. There are 1.87 billion shares outstanding with a Float of 1.73 billion. Insiders own 7.19%; institutions have 66.80%. The annual dividend is 35 cents for a yield of 1%. It takes 18% of earnings to pay the dividend. Financial Strength is A by Value Line.

Conservative investors who feel the economy will turnaround soon and hold positive gains will find a lot to like here. While it has a rather high Beta of 1.23, there are compensating factors that should give investors comfort, ones like strong cash position, solid diverse revenues, improving earnings. Disney is a broad based entertainment conglomerate that will do very well when consumers feel more confident.

- Company Web site: www.disney.com

Ted Allrich