Donald Thomas
The Black ArachKnight
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Aloha,
While I am an avid Spidey comic book collector-I wanted to share with the fans some of what the business of comic books is all about.One of my big fears is that internet comic book fans will become the JOKE of comic book business. I say this because often, the business of comic books is doing very well in spite of some comic book fans saying that things are crap or the writing is crap.
Here's the latest from Wall Street
Marvel Shows Its Might
The publishing and entertainment outfit's recent moves have boosted its revenues and share price. Can it sustain the superpowered surge?
by Ronald Grover
Want to see pent-up demand? There was plenty to spare at the San Diego Convention Center in July, when Marvel Entertainment (MVL) titillated the faithful at the annual Comic-Con convention. With nearly 1,000 die-hard comic-book fans in attendance, the company that makes Spider-Man swing and X-Men mutate unveiled plans for its next Incredible Hulk as well as new flicks based on its Ant Man and Iron Man franchises. Since then, Marvel shares have been supercharged, jumping 41%, to $26.52, on Nov. 9.
How much higher Marvel can leap is another story. The company beat Wall Street estimates on Nov. 6, announcing a 13.5% hike in revenue, to $92.2 million, although earnings declined by 43.5%, to $13.2 million. More important, the home to the Fantastic Four hiked both its guidance for 2007 and the rest of this year, sending analysts scurrying to boost the earnings targets. Raymond James analyst Joseph Hovorka, who rates Marvel outperform, hiked his 12-month target to $31.50, from $28, saying the number "is justified by the high free cash flow generation of the company."
Not everyone completely agrees, however. Although he boosted his own target price to $25 from $19 a share, Bank of America analyst Michael Savner maintained his neutral rating for the stock. Savner voices concern that the company's boost earlier in the year was likely fueled by stock buybacks, and he still worries that the company's "lack of transparency" about future prospects might make earnings the rest of the year "more risky." He also says management changesthe company's top international and consumer-products executives, and its primary film executive left this summerhave "made us increasingly skeptical."
Action Figures
Still, no one can fault Marvel for the steps it has taken to potentially boost its earnings. Late last year, it closed on a $525 million credit facility that it says will give it greater control overand hopefully more revenue fromthe production and timing of its films. That enables Marvel to make films on its ownsuch as Iron Man, which Paramount (a unit of Viacom (VIA)) will distribute in 2008as well as to continue to license some of its films to studios like Sony (SNE), which will release Spider-Man 3 next summer. The downside is that Marvel must shell out money for the films that it intends to produce, which Marvel Executive Vice-President David Maisel said would cost between $100 million and $160 million apiece.
Marvel has taken other steps to boost its earnings. Late last year, it terminated its existing toy-licensing agreement with Toy Biz Worldwide and signed instead with Hasbro (HAS), which has already paid Marvel a $105 million advance for a deal that begins in January. The company hasn't yet booked much of the $75 million guarantee for Spider-Man 3, Marvel Chief Financial Officer Ken West told analysts. That advance is roughly double the guarantee for Spider-Man 2 and four times what the company got in 2001 for the original Spider-Man, West adds.
The expected revenue boost from next year's release of Spider-Man 3 by Sony and Fantastic Four 2 by Fox prompted the company to hike its 2007 net sales number to a range of $375 million to $435 million, according to West. The company is expected to have 2006 sales of $338 million in 2006, according to BoA analyst Savner's report. Savner also expects Marvel's operating margins to jump to 48.4% in 2007, from 30% this year and 43.8% in 2005, when its numbers were boosted by the release of the first Fantastic Four film and sales of Spider-Man 2 DVDs.
Those are superhero-like numbersand a big reason why Wall Street has sent Marvel's stock skyward. Can the company that lives and dies by guys in masks continue to knock 'em dead? The market is there. Just ask the comic-book fanatics who gathered this summer in San Diego to cheer on Iron Man this summer. And that film's at least two years away from hitting the big screen.
Grover is Los Angeles bureau chief for BusinessWeek.
Spidey rules in the Street as well as roof tops
While I am an avid Spidey comic book collector-I wanted to share with the fans some of what the business of comic books is all about.One of my big fears is that internet comic book fans will become the JOKE of comic book business. I say this because often, the business of comic books is doing very well in spite of some comic book fans saying that things are crap or the writing is crap.
Here's the latest from Wall Street
Marvel Shows Its Might
The publishing and entertainment outfit's recent moves have boosted its revenues and share price. Can it sustain the superpowered surge?
by Ronald Grover
Want to see pent-up demand? There was plenty to spare at the San Diego Convention Center in July, when Marvel Entertainment (MVL) titillated the faithful at the annual Comic-Con convention. With nearly 1,000 die-hard comic-book fans in attendance, the company that makes Spider-Man swing and X-Men mutate unveiled plans for its next Incredible Hulk as well as new flicks based on its Ant Man and Iron Man franchises. Since then, Marvel shares have been supercharged, jumping 41%, to $26.52, on Nov. 9.
How much higher Marvel can leap is another story. The company beat Wall Street estimates on Nov. 6, announcing a 13.5% hike in revenue, to $92.2 million, although earnings declined by 43.5%, to $13.2 million. More important, the home to the Fantastic Four hiked both its guidance for 2007 and the rest of this year, sending analysts scurrying to boost the earnings targets. Raymond James analyst Joseph Hovorka, who rates Marvel outperform, hiked his 12-month target to $31.50, from $28, saying the number "is justified by the high free cash flow generation of the company."
Not everyone completely agrees, however. Although he boosted his own target price to $25 from $19 a share, Bank of America analyst Michael Savner maintained his neutral rating for the stock. Savner voices concern that the company's boost earlier in the year was likely fueled by stock buybacks, and he still worries that the company's "lack of transparency" about future prospects might make earnings the rest of the year "more risky." He also says management changesthe company's top international and consumer-products executives, and its primary film executive left this summerhave "made us increasingly skeptical."
Action Figures
Still, no one can fault Marvel for the steps it has taken to potentially boost its earnings. Late last year, it closed on a $525 million credit facility that it says will give it greater control overand hopefully more revenue fromthe production and timing of its films. That enables Marvel to make films on its ownsuch as Iron Man, which Paramount (a unit of Viacom (VIA)) will distribute in 2008as well as to continue to license some of its films to studios like Sony (SNE), which will release Spider-Man 3 next summer. The downside is that Marvel must shell out money for the films that it intends to produce, which Marvel Executive Vice-President David Maisel said would cost between $100 million and $160 million apiece.
Marvel has taken other steps to boost its earnings. Late last year, it terminated its existing toy-licensing agreement with Toy Biz Worldwide and signed instead with Hasbro (HAS), which has already paid Marvel a $105 million advance for a deal that begins in January. The company hasn't yet booked much of the $75 million guarantee for Spider-Man 3, Marvel Chief Financial Officer Ken West told analysts. That advance is roughly double the guarantee for Spider-Man 2 and four times what the company got in 2001 for the original Spider-Man, West adds.
The expected revenue boost from next year's release of Spider-Man 3 by Sony and Fantastic Four 2 by Fox prompted the company to hike its 2007 net sales number to a range of $375 million to $435 million, according to West. The company is expected to have 2006 sales of $338 million in 2006, according to BoA analyst Savner's report. Savner also expects Marvel's operating margins to jump to 48.4% in 2007, from 30% this year and 43.8% in 2005, when its numbers were boosted by the release of the first Fantastic Four film and sales of Spider-Man 2 DVDs.
Those are superhero-like numbersand a big reason why Wall Street has sent Marvel's stock skyward. Can the company that lives and dies by guys in masks continue to knock 'em dead? The market is there. Just ask the comic-book fanatics who gathered this summer in San Diego to cheer on Iron Man this summer. And that film's at least two years away from hitting the big screen.
Grover is Los Angeles bureau chief for BusinessWeek.
Spidey rules in the Street as well as roof tops
