Disney's fourth-quarter earnings; 80% of success is just showing up; I lost in doubles despite being paired with a Wimbledon player

1) I've been meaning to take a look at the beaten-down shares of Disney (DIS), which have crashed by more than 50% since reaching an all-time high in early 2021, and now sit near a 10-year low:

If there's one thing that gets my value-investing heart beating fast, it's a chart like that for one of the world's greatest companies.

And despite its recent woes, Disney is a great company.

I can remember clearly the few times my parents took me to Disneyland and Disney World in the 1970s, the many times I took my daughters there – believe it or not, I loved riding on "It's a Small World" eight times in a row with them – and I can't wait to take my grandchildren there.

My college buddy Bill Ackman and I did a couple of dads-and-daughters trips to Orlando (at the time, we each had three daughters... he now has a fourth). Here's a picture I took of Bill with our two oldest ones (who are now in their late 20s):

Even though the rides were newer and more technologically advanced at Universal Studios, our kids preferred the Disney parks because of the characters like Goofy and the princesses.

I'm not sure any amount of money could dislodge Disney's characters/brands...

So with this in mind, let's take a quick look at the company's fiscal fourth-quarter earnings, which it reported last night...

Revenue during the quarter grew 5.4% to $21.24 billion – slightly below expectations of $21.4 billion – but adjusted earnings were $0.82 per share – well above expectations of $0.69 per share.

The Disney+ streaming service added nearly 7 million core subscribers in the fourth quarter – ending at 150.2 million, which was above expectations of 147.1 million.

The "Experiences" segment (resorts, the cruise line, vacation clubs, etc.) grew operating income by more than 30%, while the ESPN sports network was roughly flat.

For the fiscal year, operating cash flow rose strongly from $6.0 billion to $9.9 billion, while capital expenditures were flat at $5.0 billion.

As for guidance, here's how the company put it in the release:

• We continue to aggressively manage our cost base, and have increased our annualized efficiency target to $7.5 billion, versus $5.5 billion previously.

• We expect to grow free cash flow in fiscal 2024 significantly versus fiscal 2023, approaching levels last seen pre-pandemic. This continued robust free cash flow growth, alongside our strong balance sheet, will position us well to address our investment and shareholder goals for the year and going forward.

"Our results this quarter reflect the significant progress we've made over the past year," said Robert A. Iger, Chief Executive Officer, The Walt Disney Company. "While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our businesses again."

Overall, it was a solid earnings report... and DIS shares were up a bit earlier this morning.

I'm not pounding the table on Disney yet, but I'm definitely going to do more work on it. Subscribers will be the first to know if I decide it's time to buy...

2) As Woody Allen once said, "80% of success is just showing up."

I've taken that to heart, in both my business and personal lives – and it has paid off in countless ways.

For example, I can't tell you how much I've benefited from attending the past 26 Berkshire Hathaway (BRK-B) annual meetings. Sure, anyone can now watch the livestream... but that doesn't hold a candle to the learning and networking that occurs in person.

Or, two weeks ago during my weeklong trip to Zurich, London, and Lithuania, I spent meaningful time with eight old friends and made two new ones. Do you think that strengthened my relationship with them? You bet it did!

Even when I take it to extremes, I usually don't have any regrets. Here's a good example, which I described in the e-mail I just sent to my personal tennis e-mail list (if you'd like to join, simply send a blank e-mail to: tennis-subscribe@mailer.kasecapital.com – It's roughly one e-mail per week, except around the Grand Slams)...

As I dragged my aching body out of bed at 5:30 a.m. on Tuesday, only hours after I returned from the World's Toughest Mudder (race report here), I was cursing myself for having agreed to play doubles at 6:30 a.m. at Columbia's new Milstein Family Tennis Center in New York City. I had called two buddies the night before to ask if they could sub for me, but no luck. At that point, I would have given anything to go back to sleep for three hours...

But I ended up being really happy I went... because I had the pleasure of spending time with two good friends, Rob and Viktor, and meeting Max, who played on the Columbia team and then on the tour for many years, including doubles at Wimbledon as recently as last year.

Viktor played on the Uzbekistan Junior Davis Cup team and college tennis in the U.S., and Rob is a strong 5.0-plus player, so the obvious pairing was Max and me against them.

Here's a picture of us (from left to right: me, Max, Viktor, and Rob):

Despite the presence of a crippled, geriatric hacker like me who had no business being on the court with these guys, it ended up being super fun and competitive. There was only one break of serve (only one break point, in fact) in the first set (I'll give you three guesses who lost their serve), which ended 6 to 4.

Then Max and I switched sides. I was receiving on the ad side, where I usually play, and all of a sudden I got a few serves back, we broke Rob, I held, and we were quickly up 4 to 1. Then, despite being up 40 to 0, I lost my serve again, and we ran out of time at 4 to 4, so we played a 10-point tiebreaker that Rob and Viktor won.

Now, I know this might come as a surprise to some of you, but I'm a pretty competitive guy...

But I didn't even mind losing because Max was so gracious about being stuck with me, we had a lot of great points, and I played far better than I expected, given my lack of sleep and wrecked body. So hopefully these guys will lower themselves and play with me again someday...

It wasn't until I got home and stepped out of the shower that I saw how badly bruised my hip was after a nasty fall I took during the race (see my race report for more lovely photos):

Best regards,

Whitney

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