Monday, February 06, 2006

Monday Earnings Watch: DIS

Media and entertainment icon Disney (DIS) will report later today.

It will be reporting in the shadow of rival conglomerate Time Warner (TWX), which reported a 21 percent increase in fourth-quarter earnings last week, exceeding analysts' expectations.

The Street is looking for 30 cents per share on revenue of $8.79 billion, compared with year-ago earnings of 34 cents per share.

If Disney meets expectations, that would amount to growth of 1% from the same period last year, certainly nothing to jump up and down for.

Disney's prospects seem to have brightened, lately, however.

First, Disney has made a major push into mobile -- via ESPN and Disney Mobile, Disney will deliver a range of entertainment content to mobile phones and, in effect, open a new revenue stream.

Second, the recent announcement that Disney is buying animation powerhouse Pixar (PIXR) has left many wondering how large a role Steve Jobs will play in solidifying Disney's position in a digital milieu.

Lastly, Disney's weakest area is ostensibly its motion picture sector, but Narnia is the 28th top grossing picture of all time, a nice came-out-of-left field surprise; along those lines, Pixar's Cars (due out in June) is going to be a blockbuster, we think.

Analysts have been lowering their projections, which has left room for an upside surprise -- keep in mind that Disney has met or beat expectations for the last four quarters.

If Disney can give us some color on its cyclical segments, and report somewhere in the .32 cents or higher range, look for an upgrade or two in the week ahead.

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