Marvel sees weak 2009 on early revenue recognition

By S. John Tilak and Deepti Govind

BANGALORE (Reuters) - Comic book publisher Marvel Entertainment Inc posted a 39 percent rise in quarterly profit recognizing revenue from films earlier than expected, resulting in a stronger outlook for 2008 but weaker for next year.

The company, which started its own film slate earlier this year by launching "Iron Man," said it anticipated only a modest performance in 2009 in terms of revenue and net income, and its shares fell as much as 9 percent.

It took Marvel one year to figure out what analysts knew all along, which is that it cannot defer film revenue, Wedbush Morgan Securities analyst Michael Pachter said.

"They're going to have lumpy earnings as they have films this year and they don't have films next year."

The company had been saying that it would recognize the bulk of revenue next year from the self-made films, which also includes "The Incredible Hulk."

After "Iron Man" and "Hulk" this year, Marvel has an "Iron Man" sequel and "Thor" planned for 2010. There are no films due in 2009.

Earnings would take a dip in 2009, Pachter said. "There's nothing they can do about it."

"Iron Man," which was distributed by Viacom Inc's Paramount Pictures, had the second-biggest non-sequel box office opening in history.

WEAK 2009

For 2009, Marvel forecast earnings of $1.00 to $1.35 a share, a 54 percent decline over expected 2008 earnings. It sees net sales of $415 million to $460 million for 2009.

The range shows some concern about a recession, Pachter said.

Analysts were looking for earnings of $1.94 a share, excluding items, on revenue of $609.5 million for 2009, according to Reuters Estimates.

The outlook reflected the absence of any new Marvel Studios feature film releases during the year and a related decrease in licensing activity, the company said.

The company forecast a $45 million decline in licensing revenue for 2009 related to Spider-Man L.P., its Spider-Man feature film merchandising joint venture.

Marvel, which boasts a stable of more than 5,000 characters including Spider-Man and X-Men, boosted its 2008 forecast to earnings of $2.45 to $2.65 a share and revenue of $640 million to $670 million.