Wall Street sees Disney beating doldrums, for now

By Gina Keating

LOS ANGELES (Reuters) - Investors say it's a matter of time until deepening U.S. economic doldrums steal into the Magic Kingdom, but they expect Walt Disney Co to have mostly escaped their effects for the first half of calendar 2008.

As Disney reports its quarterly results this week, investors and analysts already are focused on the year's back half for signs that the company's astonishing profitability during the year-long economic downturn is faltering.

Wall Street expects low-single-digit rises in profit and revenue for Disney's fiscal third quarter ended in June.

Analysts, on average, expect Disney to post net earnings of 60 cents per share and revenue of $9.14 billion, only slightly ahead of last year's quarterly EPS of 58 cents and revenue of $9.05 billion, according to Reuters Estimates.

Analysts said the true impact of souring consumer sentiment and falling disposable income on Disney may be masked by a number of factors that may narrow profits and depress revenue.

The issues include a revenue deferral at ESPN, tough comparisons for the theme parks and movie businesses, and possibly higher costs at the consumer products division.

Disney Studios is expected to drag on overall company results, mainly because "The Chronicles of Narnia: Prince Caspian" failed to measure up to last year's blockbuster "Pirates of the Caribbean" sequel.

The parks business, considered a consumer bellwether, is expected to post growth but will be compared against a 2007 quarter that included an Easter holiday and record attendance.