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Marvel’s economics

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Marvel released their quarterly economic indicators, today led by a drop in profits, but a rise in guidance.

Marvel Entertainment Inc,, which licenses comic book characters such as Spider-Man, on Monday said quarterly profit fell 44 percent as higher costs outstripped solid comic book sales. Net income fell to $13.2 million, or 16 cents a share, from $23.4 million, or 23 cents a share, a year earlier. Total net sales rose to $92.2 million from $81.1 million, helped by strength in toys and publishing. The company’s shares rose 6.9 percent, or $1.73, to $26.78 on the New York Stock Exchange, after the earnings report, which also forecast higher earnings for 2007. Marvel forecast earnings per share for 2007 of $1.35 to $1.55, up from the 97 cents it earned in 2005. It said sales would likely run between $375 million and $435 million for the year, compared with $391 million in 2005.


Marvel stock has been a strong performer since the last quarter, which had news generally described as gloomy. Motley Fool, which has been a huge supporter of the stock since 2002, pegged the generally favorable outlook on the company publishing performance:

Purists may cheer, since this turned out to be the rare quarter in which the company’s flagship publishing business produced more revenue than its licensing workhorse. In fact, it was the only part of the company to muster improvement in operating income, as licensing and toys slipped for the quarter.

Don’t let the lulls dissuade you. This was supposed to be a transitory year. Next year, Sony(NYSE: SNE) will be putting out Ghost Rider and the can’t-miss Spider-Man 3. News Corp.’s (NYSE: NWS) 20th Century Fox will also be back to the Marvel film-licensing till when the Fantastic Four sequel, Rise of the Silver Surfer, gets the big-screen treatment. We’re also at the start of a five-year toy licensing deal with Hasbro(NYSE: HAS) that should help expand Marvel’s global toy shelf reach.

So even if it’s encouraging to see Marvel raise its 2006 outlook — calling for earnings to clock in between $0.61 to $0.64 per diluted share over its initial guidance of $0.50 to $0.60 a share — the real meat to Marvel’s report is its rather robust net income targets for 2007.


Looking at Marvel’s press release, publishing sales were up $5 mil for the quarter, and they forecast continued “modest” growth.

In other Marvel announcements, a June 27, 2008 date was announced for the Louis Leterrier-directed HULK 2 movie, and Sega announced plans to develop Iron Man in the video game realm. Marvelheld an earnings call this morning, but its Mac-unfriendly format means we’ll have to listen to it at a later date.

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