Source: Chicago Tribune
World Wrestling Entertainment Inc., producer of the “WWE Friday Night SmackDown” television shows, said second-quarter profit fell 11 percent as the company spent more to boost sales from DVDs and international markets.
Net income dropped to $10.4 million, or 15 cents a share, from $11.7 million, or 17 cents, a year earlier, Stamford, Connecticut-based World Wrestling said today in a statement. Sales rose 8.2 percent to $96.2 million in the three months ended Oct. 27.
Shares of World Wrestling jumped as profit and sales beat analysts’ estimates. The company added employees in its Internet division to increase online sales and spent more to advertise DVDs. The company also more than tripled the number of events it staged outside the U.S.
“We are trying to find the right balance to opening new markets and covering existing ones,” Chief Financial Officer Michael Sileck said in an interview.
World Wrestling shares rose 82 cents, or 5.1 percent, to $16.96 as of 3:07 p.m. in New York Stock Exchange composite trading. They had advanced 10 percent this year before today.
Profit beat the 12-cent estimate of Alan Gould, an analyst with New-York-based Natexis Bleichroeder Inc. Analysts predicted sales of $88 million to $92 million, based on two estimates compiled by Bloomberg.
Revenue from DVDs and videos rose 22 percent to $14.5 million, boosted by shows including “Hulk Hogan: The Ultimate Anthology” which sold about 200,000 copies.
“The company continues to invest in its digital video as the catalog of shows proves to be very strong,” said Gould, who doesn’t own the shares.
The company replaced Sony Corp. as its distributor in October and signed Genius Products LLC to get better placement with major retailers, Sileck said. About 40 percent of DVDs were sold in Wal-Mart Stores Inc., up from 20 percent a year ago.
Television advertising revenue fell 81 percent to $1.5 million as an agreement with NBC Universal Inc.’s USA Network excluded the company from selling domestic ads.
Online merchandise sales increased 51 percent from a year earlier with the number of monthly Web site visitors rising 84 percent to 16.6 million a month.
Live event sales jumped 35 percent to $17.6 million because of more frequent shows. World Wrestling had 101 events in the second quarter, compared with 78 in the year-earlier period. Attendance per show dropped to 4,000 from 4,300.
The company reiterated estimates of net income for the year of $30 million, or 43 cents a share, from continuing operations.
