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Author Topic: Marvel in financial trouble -- yet again!  (Read 4966 times)
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Captain Kal
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« on: November 13, 2005, 12:10:48 AM »

Marvel Entertainment Inc. profit drops 32 per cent, sees dismal '06
November 09, 2005

NEW YORK (AP) - Marvel Entertainment Inc. reported a 32 per cent plunge in third-quarter profit Wednesday and warned investors its earnings next year would fall well below analysts' forecasts as revenue dries up from the blockbuster success of Spider-Man 2.

Marvel also said its earnings from toy licensing would drop next year following the success of its Fantastic Four toys this year, and noted that it would incur significant expenses as it ramps up its own production of films based on Marvel comics characters.

Investors punished Marvel's stock following the announcements, sending the shares down $3.98 US or 22.1 per cent to $14.6 on the New York Stock Exchange in heavy volume of 13 million shares versus average volume of 790,000 shares.

Marvel's net income fell to $23.4 million, or 23 cents per share, from $34.4 million, or 30 cents per share, a year ago. Revenue fell 40 per cent to $81.1 million from $135.2 million last year.

Analysts surveyed by Thomson Financial had expected earnings per share of 30 cents on revenue of $100.3 million.

Toy sales fell to $22.1 million from $48.2 million a year ago, and licensing sales dropped to $33.2 million from $64.2 million due to lower contributions from Spider-Man licences compared with last year when the movie Spider-Man 2 was released in theatres.

Marvel said it now expects to earn between $38 million and $53 million in 2006, far below the $111 million to $114 million it expects to earn in 2005.

Morton Handel, company chairman, warned that 2006 looks to be a "difficult year for both toys and licensing."

Marvel also cited several other factors for the poor outlook in 2006 - "nominal" contributions from the three films based on Marvel characters due out next year, X-Men 3; Ghost Rider and The Punisher 2; $5 million in expenses as it builds up its own movie production arm; and $16 million in interest costs as it creates a new $525 million credit facility to fund new movies.

Marvel has traditionally licensed its main characters such as Spider-Man, The Fantastic Four and The Incredible Hulk to major Hollywood studios in exchange for licensing fees.

But with the global box office take of the coming slate expected to be much lower than the $800 million that the first and second Spider-Man films each took in, Marvel is forecasting very few contributions from film licensing next year, spokesman David Collins said. He also noted that each film had different economic arrangements with the studios, but he declined to discuss those details.

Marvel is hoping to capture a bigger share of the profits from future movies based on its characters by funding and producing some future films on its own, based on lesser-known characters such as Captain America, Ant-Man, Doctor Strange and Luke Cage.

However, Bear Stearns analyst Glen Reid has described the terms of the financing arrangements Marvel made as "somewhat onerous." In a note to investors, Reid said that Marvel's decision to take on production of some of its own films was a "path fraught with risk" since it won't have a large portfolio of films in the works to reduce volatility.

Captain Kal

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Super Monkey
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« Reply #1 on: November 13, 2005, 12:50:09 AM »

Iron Age books don't sell as good as the Sliver Age and Bronze Age ones, so the only thing they can make money off of is toys, (Marvel itself barely makes anything off the films themselves, thanks to their wacky deals to have the studio give up the toy rights) and they have made lots of lousy business moves, and they seem to want to make a whole lot more by trying to make the films themselves, if one of them bombs, that could be all she wrote.

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« Reply #2 on: November 13, 2005, 02:16:28 AM »

Marvel has a tendency to make bad business decisions.  They see how movie studios and/or toy comapnies make money off of their characters and now they havedecided that they want more and/or a majority of the profits.  So they will go out and produce those movies/toys themselves.  Then when the toys/movies don't make money, Marvel ends up in financial trouble.]
They did this with distributing their own books years ago.  It didn't work and they ended up in the red.  I wouldn't be surprised to see them in serious trouble again.

Supermanica Council
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« Reply #3 on: November 13, 2005, 08:29:02 AM »

From Tom Spurgeon's Comics Reporter:
The major comics news sites weighed in with their take on what happened, basically a cyclical dry-up on Spider-Man licensing and a blasted-out toy business into which Marvel's toy division was trying to move some dubious properties, including TNA Wrestling figures.

Proving once and for all why I'm never going to get rich playing the market, I always thought the stock was over-inflated and figured yesterday's news wasn't all that bad, indicating a strong core business weathering an expected downturn. I'm also biased towards comics, with a tendency to see that part of the business as the core around which the rest of Marvel Entertainment's businesses are levels of luxury to be wrapped in or jettisoned depending on market caprice.

I still imagine that this will have little to no effect on publishing, Marvel's run as a company at its current, still slightly inflated size and slate of general expectations with play itself out in slightly diminishing cycles, Motley Fool will run another 12,863 analyses, Marvel will buy back a bunch of stock during these slight down periods and everyone involved at the top of the corporation will continue to wear solid gold shoes and diamond-studded underwear for a very long while. But really: don't trust me.


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« Reply #4 on: November 13, 2005, 09:42:49 AM »

All that numbers stuff looked like Chinese to me. But I got the jist of it: Marvel isn't making money.

However, I refuse to believe this downturn has nothing to do with how lousy ELEKTRA was.

There's something about the business world that makes you smart and stupid at the same time. For example, a few months ago there was an article in the New York Times financial section about the recent loss of profits for Hollywood over the summer. They blamed it on a variety of reasons, including the common straw man of internet downloads, and in general seemed really, really baffled as to WHY their movies weren't making money.

But at the same time, they typed this phrase out: "The studio's losses come despite the fact that in theaters now there is a remake of the THE DUKES OF HAZZARD and a sequel to THE LOVE BUG."

I cannot believe any human being actually typed that with a straight face.

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« Reply #5 on: November 16, 2005, 06:05:29 PM »

All I see in those numbers is a return to normal. Yes, comics don't sell very well, but that's not new. They made lots of money from Spider-Man 2, and now they're not.

When Spider-Man 3 comes, they'll make money again. And they should stop licensing movies to production companies that suck. I didn't watch Punisher or Elektra, but the Hulk was terrible when compared to the original story.

DC is doing better movie-wise right now. Even though they took some liberties with the characters, Constantine and Batman Begins were good.

"Trying to capture my wife, eh? That makes me SUPER-MAD!"

-"Superman", 1960

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