The Walt Disney Internet Group, which is the Internet business arm of the
Walt Disney Company, Thursday released positive year-end and fourth quarter
results.
Walt Disney Internet Group’s revenue grew 39 percent, to $277.2 million,
during the fiscal year 2000 with total revenue standing at $392 million, a
13 percent growth over last year. For the quarter, Internet revenues
increased 9 percent to $61.3 million.
“We accomplished what we set out to do,” said Steve Bornstein, chairman
of the Internet Group. “We consolidated operations in a significant way,
integrated sales operations, successfully relaunched GO.com and ESPN and
ABC-branded sites, built our leadership positions across our Disney and
Family, leveraged Disney assets and maximized Internet buys. We are now well
positioned to pursue the growth of Disney’s Internet businesses during
fiscal-year 2001.”
Revenues for the quarter from Internet operations increased 9 percent
compared to prior-year pro forma amounts, and revenues for the quarter from
direct marketing catalog operations decreased 33 percent, resulting in a
total decrease in revenues of 6 percent to $82.4 million.
Bornstein noted that the decrease in direct marketing revenue is part of
the company’s planned reduction in that arena in an effort to create online
customer migration.
Operating income, net loss and loss per share for the quarter were $50.4
million, $45.7 million and $0.29, respectively, excluding non-cash
amortization of intangible assets ($212.4 million).
Revenues were impacted by the one-time sale of Ultraseek Corp., a
subsidiary that provides intranet search software, which it had acquired as
part of its acquisition of Infoseek, according noted Spencer Neumann, CFO.
Neumann described the company’s three-part plan to add to its revenue
stream via advertising, e-commerce and licensing and subscription.
“We will develop and grow our market-leading sites and continue to focus
on existing business,” Neumann said. “In the wireless space, we have
partnered in subscription delivery services with DoCoMo in Japan and have
more than 300,000 subscribers signed up for the service. We are well
positioned to distribute content in broadband and are building a single
platform targeting broadband users, starting with our news, sport and
entertainment offerings.”
Excluding the gain on the sale of Ultraseek, as well as amortization and
the impairment charges, pro forma operating loss, net loss and loss per
share for the full year were $395.0 million, $233.4 million and $1.50,
respectively.
The company reported higher advertising and sponsorship revenues, driven
by increased advertiser demand and higher online site traffic at ABC.com,
ABCNEWS.com, ESPN.com, Disney.com and Family.com, partially offset by
decreases at the GO.com Web site.
“Throughout 2000, our collection of sites continued to perform strongly
as some of the leading destinations on the Web,” said Michael D. Eisner,
chairman and CEO of The Walt Disney Co. “One of our singular achievements
was Enhanced TV, which we believe is leading the way in the convergence of
the television with the Internet. Looking forward, we will continue to bring
the strength of our brands and the strength of our company to build the Walt
Disney Internet Group into one of the strongest presences on the Internet.”
According to a report by Media Matrix, WDIG has 83 million average daily
page views and 27 million registered users.
The company operating loss, net loss and loss per share were $242.1
million, $217.1 million and $1.40, respectively, on a pro forma basis,
excluding non-cash amortization of intangible assets ($909.4 million).
For the quarter, media revenues decreased 7 percent to $41.2 million,
which reflects lower advertising and sponsorship revenues at GO.com during
the redesign of the Web site, according to Steve Wadsworth, president of
W
DIG.
“We will continue to refine and improve GO.com,” he said. “We recently
started a marketing campaign sponsoring a major effort for the site. The
theme is ‘Where to Look First’ and has a tag line of ‘Your Guide to a Better
Time.’ We are running this campaign in the print and electronic media.
“New revenue streams were also realized through our auction site in
conjunction with e-bay as well as our disneystore.com and vacations.com,”
Wadsworth said.
Commerce revenues increased 100 percent to $76.4 million and 74 percent
to $20.1 million compared to the prior year and prior-year quarter,
respectively, reflecting increased merchandise sales at DisneyStore.com and
increased sales of travel products at DisneyTravel.com.
Further, commerce revenue growth reflected a 74 percent and 51 percent
increase over the prior year and prior-year quarter, respectively, in the
total number of orders per month, as well as increases in average order size
across the Internet Group’s commerce sites.
Higher commerce revenues were also driven by Web site development
revenues generated from Web site services provided to affiliates.
Internet operating losses increased from $184.2 million to $365.0 million
for the year and from $62.3 million to $93.4 million for the quarter,
excluding non-cash amortization of intangible assets.
These increased losses reflect higher costs and expenses due to continued
investment in Web site technology and new product initiatives, growth in
infrastructure due to expansion of the business, ongoing enhancements to
existing Web sites, the redesign of the GO.com Web site, and increased sales
and marketing costs due to the expansion of the Internet Group’s commerce
and media businesses.
Internet operating losses for the year also included operating costs at
toysmart.com until its closure in June 2000, and a non-cash charge of $30.8
million ($0.09 per share) to reflect the impairment of certain intangible
assets.
During the fourth quarter, the Internet Group sold approximately 40
percent of its Inktomi shares for a small gain. In October 2000, the stock
price of Inktomi shares declined, resulting in an unrealized loss of $86.0
million as of Nov. 7, 2000, to the Internet Group.
