While those figures represented gains over the prior year quarter of 18% and 7%, respectively, the consensus estimate among analysts was for diluted earnings of $1.95 a share, and $15.34 billion in revenue.
When certain accounting items affecting comparability (such as taxes or deferments) were included in the results, earnings per share reached $1.95.
Disney stock declined as much as 3% in the early stage of after-hours trading, erasing gains during the regular session, but soon recovered to near its closing-bell level. Shares earlier in the day hit a three-year high of $117.88 before retreating to finish at $116.60, up a fraction.
The stock more than doubled in value between 2012 and 2015 as the company leveraged Marvel, Lucasfilm and Pixar and asserted its dominance in the film business. But it has been up and down in the years since as the company has faced questions about video subscriber erosion and competition from streaming services. In the past month, amid increasing clarity around the company’s game-changing Fox acquisition, it has risen 11%.
Compared with the steady-on Studio and Theme Parks units, Cable Networks struggled in the quarter. Due to the acquisition of a controlling stake in OTT tech specialist BAMTech in the prior-year period, plus a downturn at Freeform, operating income decreased 5% to $1.4 billion as revenue inched up 2% to $4.2 billion. Freeform’s issues were lower ad revenue and higher marketing costs, which were partially offset by lower programming costs.
The movie studio saw strong box office with theatrical titles during the quarter, mainly Avengers: Infinity War and Incredibles 2. Revenue increased 20% to $2.9 billion, while operating income rose 11% to $708 million. The home entertainment timing of Solo: A Star Wars Story — a rare money-loser in the Star Wars universe — dinged the results. While Rogue One, the previous spinoff, landed in the third quarter of 2017, Solo arrived in the marketplace in the fiscal second quarter, which Disney said skewed the results. The earnings release contained no commentary about a financial write-down of the film’s losses of up to $50 million, which many analysts had predicted.
The company’s earnings call with Wall Street analysts offered analysts some highly anticipated commentary on the pending $71.3 billion acquisition of most of 21st Century Fox. CEO Bob Iger also offered comments about the company’s planned direct-to-consumer streaming service, notably how it will stack up against Netflix.