As we’ve mentioned, historically, when a SPIDER-MAN film comes out and sets box office records, Marvel’s stock usually takes a tumble as people rush to sell off. This is no different, than last time, but did result in a downgrade from several analysts.
Part of the problem is that Marvel’s great quarter was due to revenue that was sxpected later in the year coming in early. as this Forbes piece explains.
Marvel’s vice chairman, F. Peter Cuneo explained during a conference call that most analysts were expecting that Spider-Man 3 licensing revenues would be recorded in the second quarter when the movie was released. However, Marvel recorded “the great bulk” of such income in the first quarter, which was reflected in a huge revenue jump in the segment from a year ago. Licensing revenues totaled $98.9 million, up 149.7%, from $39.6 million. The shift of licensing revenues to the first quarter could push Marvel’s second-quarter earnings below expectations. Analysts polled by Thomson Financial are expecting 47 cents per share but that number seems likely to slip in the coming weeks. With Marvel’s earnings strong but not quite as stellar after first glance, investors sold the stock. Its shares have appreciated considerably over the past couple of months with help from the Spider-Man 3 marketing. The movie was released on Friday and took in an estimated $148 million in domestic ticket sales in its first three days.
The transcript of that last investors call is already up and it’s notable in that Marvel’s publishing head Dan Buckley is on hand; unfortunately, the transcript is not in English, but you can get some idea of what he said from this excerpt:
Drew, we’ve had a lot of benefit from the standpoint of Civil War came out at the tail-end of this year, along with Dark Tower launching, and then we also had The Death of Captain America comic book, which did tremendous volumes for us, which probably put us on the topside of our margin because obviously with printing, there’s a lot of fixed costs associated with staffing and how you set up presses.
So from a margin standpoint, I don’t know if there is much more upside that we can squeeze out of there. I do see that we will probably be fairly consistent with the margins that we have reported for the last couple of — what we’ve been doing over the last couple of years, but with what we have planned out for the next year, I think we can cycle well against what we had happen with Civil War and other programs that we did.
Translation (we think): Publishing remains Marvel’s small but consistent little division.
Translation – he doesn’t think there’s anything he can do to reduce the cost of printing and individual comic (i.e. increase the amount of profit per issue sold), but he does think they’ve got events planned that will keep sales volume, overall, around Civil War levels.
I used to be a shareholder in Marvel in high school when my Grandpa bought me the shares to try to stimulate an interest in investing.
They used to do these really cute annual reports. They were comics. It was awesome. I still have them. i wonder if they still do them that way?
Marvel will raise FY guidance in Q2 since Q1 was so lopsided Q2 would come in below analayst expectations and Marvel always tops estimates for FY. They’ll need to raise them next Quarter. The time is to invest now to reap the rewards of their own slate coming in 2008.