Movie Flops Hurt Disney Results
The Walt Disney Co. posted a 27 percent drop in fourth-quarter profit, as movie flops such as "Dark Water" and "The Brothers Grimm" drove the film unit to its biggest loss in at least six years. Profit fell to $379 million, from $516 million in the comparable period a year earlier, the company said. Sales rose 3 percent, to $7.73 billion.
Chief executive Robert A. Iger said he will take a "hard look" at film marketing costs after disappointing box-office sales led to a 20 percent drop in revenue from the studio. The ESPN sports cable channels and the ABC television network, home to "Lost" and "Desperate Housewives," tempered the drop.
Firms Faulted for Audit Work
Ernst & Young and PricewaterhouseCoopers, the second- and third-biggest U.S. accounting firms, produced audits with deficiencies "of such significance" that their assessments of company finances may be called into question, U.S. accounting regulators said.
Problems with eight audits by Ernst & Young and 30 by PricewaterhouseCoopers were serious enough to suggest that the accounting firms failed to obtain "sufficient competent evidential matter" to support their opinion on clients' financial statements, the Public Company Accounting Oversight Board said in separate reports.
Chrysler Joins Incentive Fray
DaimlerChrysler's Chrysler Group said it will give two years' worth of gas to customers who buy 2005 or 2006 vehicles before Jan. 3, after announcements of new discounts by rivals General Motors and Ford Motor. Chrysler will also kick in two years of free scheduled maintenance and increase the warranty on mechanical parts to five years or 60,000 miles. Chrysler now offers a three-year, 36,000-mile warranty. The offer begins Monday. The "free gas" will come in the form of a $2,400 debit card that can be used for anything.
Delta Argues for Pay Cuts
Delta Air Lines needs to cut pilots' pay and benefits because it is losing $5 million each day, even as it works to stay afloat, the company's chief financial officer said during a bankruptcy court hearing in New York.
Edward Bastian said Delta's cash flow would break even for 2006 and generate $1 billion in 2007, but he said the airline needed to impose the wage and benefits cuts to fight volatile fuel prices, pay down debt and hedge against other unforeseen circumstances.
The pilots union, the Air Line Pilots Association, has threatened a strike if the bankruptcy court judge grants Delta's request. The company maintains a walkout would violate the Railway Labor Act.
Hearings on the matter resume Nov. 28.
Industrial Output Surges
Output at the nation's factories, mines and utilities rose in October at the fastest pace in 17 months. The Federal Reserve reported that industrial output was up 0.9 percent last month as refineries and oil and natural gas platforms began production again after shutdowns caused by hurricanes Katrina and Rita.
Last month's increase followed a 1.5 percent drop in September, which was the biggest one-month drop in industrial production in more than two decades. The Fed said manufacturing output was up 1.4 percent last month, the biggest increase in six years, reflecting in part the end of a strike at aircraft manufacturer Boeing.
Mineta Seeks Amtrak Turnaround
Amtrak's board is looking for a new president to turn the passenger railroad around, not dismantle it, Transportation Secretary Norman Y. Mineta said. Its board fired David L. Gunn as president last week after Gunn opposed its September decision to explore breaking off the Northeast Corridor from Amtrak and allowing a private consortium to run it. "Board President David Laney made clear that they are looking for a turnaround CEO and not a liquidator. And I agree," Mineta said in a New York speech.
Starbucks said its fiscal fourth-quarter profit rose nearly 21 percent, to a record $123.7 million, from $102.6 million. Revenue for the three months ended Oct. 2 grew more than 14 percent, to almost $1.66 billion. The chain's fiscal 2005 profit climbed 27 percent, to $494.5 million, as its revenue increased 20 percent, to nearly $6.37 billion.
Gap said third-quarter profit fell 20 percent, to $212 million, as the clothing retailer stumbled through its worst sales slump in more than three years. Sales were $3.86 billion, a 3 percent decline over the corresponding period last year.
Compiled from staff and news service reports.