Disney Financial Analysis

The Disney Corporation should aim to meet the quadrant of the matrix that combines good projects and cash surplus.  However, this is an ideal situation that the company has to find itself in where its sources of revenue remain the same and the company continues to take steps to have good projects.  Disney should take all necessary steps to continue to try to aim for an area where it is in a cash surplus and has good projects, for this will allow for the maximum flexibility in setting its dividend policy.  If the company is not in this financial situation, it will have to take the necessary steps by either investing in the right projects under the right management or cutting out dividends as necessary.  

For the company as a whole, the recent trend of the stock is slightly positive.  The stock, according to the last reports, is up 0.83% (Walt Disney Co., 2012).  However, the 4th quarter reports that the profits will match the company’s expectations but the revenues will fall short.  This worried the investors of the company and it showed financially.  The shares reported the following: “down $1.29, or 2.6 percent, to $48.75 in after-hours trading,” (Spingler, 2012, para. 3). In response to these falling share prices, CEO Bob Iger continued to voice his public support for the company’s purchase of Lucasfilm Ltd.  He feels the value of the addition of this franchise is “unparalleled.”

According to the stock market financial theory, the advice is solid for future investors.  Do not panic and do not count this company down so long as the investors have faith in Iger’s leadership and path of the company.  He stated that the company was simply in a “transition year” and was “shifting from an ‘investment mode’ to a ‘more compelling growth mode’,” (Friedman, 2012, para. 1).  Generally, the potential investor and those with a stake in the company have to ask themselves the question of the leadership ability of Iger and if he can be trusted to lead this company.  With the addition of Lucasfilm Ltd. and plans for a new Star Wars trilogy, the financial future of Disney is looking fine.

References

Friedman, J. (2012). Advice for Disney investors: Don't panic!. Market Watch, Retrieved from http://www.marketwatch.com/story/advice-for-disney-investors-dont-panic-2012-11-12

Spingler, M. (2012, Nov 08). Disney 4th-quarter profit matches expectations while revenue falls short. The Washington Post, Retrieved from http://www.washingtonpost.com/business/technology/disney-4th-quarter-profit-matches-expectations-while-revenue-falls-short/2012/11/08/3bc5797c-2a05-11e2-aaa5-ac786110c486_story.html

Walt Disney Co. (DIS) - NYSE. (2012). Yahoo Finance, Retrieved from http://finance.yahoo.com/q?s=DIS