LPWire: Disney and Gold Respond to Eisner's Comments at Smith Barney Conference - LaughingPlace.com: Disney World, Disneyland and More

LPWire: Disney and Gold Respond to Eisner's Comments at Smith Barney Conference

Roy Disney and Stanley Gold Comment on Walt Disney CompanyPresentation At Smith Barney Media Conference

Roy E. Disney and Stanley P. Gold of Shamrock Holdings issued the following statement following Michael Eisner's presentation today at the Smith Barney media conference held in Phoenix.

"While we were pleased to hear that the Walt Disney Company and, in particular, its studio entertainment division, is expecting strong momentum going into 2004 with anticipated 30% EPS growth, we have several observations on the Company's comments and first quarter projected results from the viewpoint of a long-term investor like the Disney family:"

  • "Historical perspective: Assuming the Company achieves its forecasts for FY 2004, earnings will only approximate those achieved six years ago -- in 1997 -- despite having significantly more capital employed in the business."
  • "Concern about forecasts: Management has consistently not met its plans.  Just one year ago, the Company projected 25% to 35% earnings growth for FY 2003, but actual growth was only 10%."
  • "Sustainability: We are concerned that much of the 'momentum' or 'growth' that Mr. Eisner referred to in his remarks is not sustainable.  They are the strength of Pirates, Nemo and Lion King re-release DVD sales, one-time change to sports rights amortization and one-time cost reductions at ABC.  What are the consistent and predictable components to future growth?"
  • "Creativity: Both ESPN and Pixar represent significant contributors to first quarter's projected performance.  Unfortunately, the Company itself creates little of this content.  Moreover, as has been widely reported, the future profitability from the Pixar relationship and ESPN is likely to moderate when compared to the past.  Lastly, this risk increases when you fail to maintain healthy relationships with partners who contribute significantly to earnings."
  • "Technology:  Mr. Eisner spoke strongly about Disney's industry-leading position in technology as a driver to future growth. Considering similar rhetoric in the heady days of the late 1990's and, since management did not provide specifics, it is difficult to evaluate whether 'technology' will be a significant future financial  contributor.  Management should provide specifics regarding several of the technology initiatives such as Movie Beam, EZ-DVD, Toon Town On-Line and Movies.com.
"For the reasons detailed above and articulated in our resignation letters, we urge the Disney Board of Directors to take a greater role in evaluating and holding management accountable for what has been a long-term deterioration in performance. We will continue to strive to inform all interested stakeholders, and we encourage people to regularly visit our web-site, www.SaveDisney.com."

--Posted January 7, 2004   
Source: Shamrock Holdings