Marvel profit beats Wall Street

By John Tilak

BANGALORE (Reuters) - Marvel Entertainment Inc (MVL.N), which licenses comic-book characters, posted a better-than-expected quarterly profit, helped by Spider-Man 3 merchandise licensing, and forecast a strong 2008, sending shares up almost 22 percent.

The company, which houses a cast of more than 5000 characters including The Incredible Hulk and X-Men, was also helped by worldwide licensing revenue and growth in its publishing segment, which prints several popular comic-book titles. Marvel also raised its outlook for 2007.

Morgan Joseph analyst David Kestenbaum called the results "spectacular," noting the company's higher-than-expected revenue from Spider-Man 3 merchandise led to the outlook hike.

There have been concerns that Marvel, which licensed theatrical character rights for Spider-Man to Sony Corp (SNE.N) (6758.T), might run out of steam after revenue fueled by the Spider-Man 3 film recedes. The stock has dropped more than 8 percent since hitting a year-high of $30.95 in late February.

Marvel spokesperson David Collins acknowledged that Spider-Man 3 had made a "major contribution" so far this year, but said the company expects ongoing growth in its core businesses.

"Spider-Man is an evergreen property," Lehman Brothers analyst Eric Handler said, noting the company will continue to benefit from Spider-Man licensing, toys and television series.

Marvel expects 2008 earnings of $1.30 to $1.50 on net sales of $360 million to $400 million. The forecast does not include potential revenue and costs from its forthcoming self-produced films.

Analysts on average expect $1.34 a share on revenue of $478.9 million, according to Reuters Estimates. The company expects revenue of $100 million to $160 million from each of its two expected films slated to hit celluloid screens in mid-2008.

Handler said the 2008 outlook eased concerns about Marvel's core businesses, licensing and toys.

SPIDER-MAN DOES IT

Analysts were surprised by the third-quarter results, which beat Wall Street's view by about 16 cents in spite of including benefits from an audit claim.

Net income for the third quarter was $36.3 million, or 45 cents a share, while net sales came in at $123.6 million.

Analysts had expected 28 cents a share on revenue of $90.52 million.

Net sales at the licensing segment, which benefited from strong contributions related to Spider-Man 3 consumer merchandise licensing, more than doubled, while sales at the publishing segment jumped 13 percent.

"The publishing segment continues to benefit from strong sales of event-driven imprints such as World War Hulk and Stephen King's Dark Tower series," Marvel's chairman, Morton Handel, said in a statement.