The Walt Disney Co has missed analysts' expectations even if it enjoyed a 2 percent increase in revenues for its fiscal second quarter. It also announced that it is getting out of the Infinity Gaming Line.
Earnings generated from its recent two blockbusters films "Star Wars: The Force Awakens" and "Zootopia" helped the movie company get its operating income.
That was a considerable contribution to Disney's overall performance for the quarter ending in April 2. The biggest entertainment company was able to generate a profit of $2.1 billion, increasing its revenue by 4 percent from the same quarter in 2015 to $12.97 billion.
However, analysts have estimated that the company's earnings per share would be $1.40 but the reality is that it was slightly less at $1.36 per share, based on data from Zack's, a financial research firm.
Being a rare occurrence, this figure hurt the cause of Disney at Wall Street. Shares of the company went down over 6 percent to $99.47 in after-hours trading.
The Burbank, CA-based company was also adversely affected by the lower ad revenue at ESPN and its expenses in building its soon-to-open Disneyland park in Shanghai.
It also announced that it was getting out of its Infinity videogame business which resulted in a $147 million charge in the quarter of April 2. This would mean the laying off of around 300 people and the closing of its Avalanche studio in Utah, according to a person with knowledge of the matter.
Investors sustained their focus on subscriber trends at Disney's ESPN sports network and the effect of "skinny bundles" and "cord-cutting" on the company's television business.
On Tuesday, the entertainment firm said that while profits climbed at ESPN, revenues in advertisements dropped due to lower ratings and rates. It placed the blame on fewer college football playoff games during the second quarter of the year.
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