The Consumer Products division performance reflected continued weakness in our merchandise licensing business. However, the Disney Stores showed modest profit improvement both domestically and in Europe.
Furthermore, the company's ability to effectively leverage its content was apparent at Consumer Products, where Disney Interactive capitalized on the success of "Who Wants to be a Millionaire?" with a CD-ROM version of the show which became the number-one overall title of the season.
Our Theme Parks and Resorts segment continued to perform well in the first quarter, reflecting the tremendous strength of these assets and the success of programs such as our Millennium Celebration. This performance is especially heartening as we look forward to opening our two new theme parks in California and Tokyo next year.
On Feb. 9, we announced results for GO.com that were also better than analysts' expectations.
In the first quarter of 2000, GO.com's operating loss, excluding amortization of intangibles, increased to $83 million from $28 million in the prior year quarter, resulting in a loss of $0.30 per share for the quarter, excluding non-cash amortization of intangible assets.
Now, GO's performance must be assessed differently from the performance for the rest of the Company for two reasons. First, GO.com is a start-up endeavor and therefore is expected to be a net user of funds as we continue to grow the business.
The second reason is that the metrics used to measure performance in the Internet industry are unique. While bottom line earnings ultimately dictate economic success, the rapid growth and evolution of the marketplace often require that Internet companies be evaluated on a top-line basis, with revenue streams, market penetration and on-line traffic serving as proxies for value-creation potential.
With this in mind, GO.com performed well in the first quarter, although there are several areas where we will look to regain momentum over time. On a pro forma basis, total revenues for GO.com were $126 million, representing a 44% increase from the fourth quarter of 1999, and a 13% increase from prior year quarter.
These figures could be a little misleading because they include significant revenues from the Disney Catalog, which we now refer to as Direct Marketing. The Direct Marketing business provides infrastructure and a customer base that is valuable to our e-commerce efforts, but its relative size in these early years tends to make evaluating GO.com's growth relative to its peers more difficult.
If we consider just our Internet-related businesses, excluding Direct Marketing, revenues were $73 million, a 47% increase over the prior year. This increase was driven by growth in our e-commerce business (which was up by over 150%), increased advertiser demand and higher site traffic across all sites.
It's worth noting that we increased our investment in our teleservice and fulfillment operations during the quarter and this investment has already begun to pay off. During the holiday season, while competitors were experiencing challenges with their holiday order fulfillment, we continued to ship on time even with orders received as late as Dec. 22. We responded to customer requests faster than ever, with an average teleservice response time of 14 seconds versus 75 seconds a year ago. Although many areas of GO.com are still evolving, the state of the art infrastructure necessary to maintain the Disney tradition of exceptional customer service and product fulfillment is in place and ready to be fully leveraged as GO.com Internet commerce continues to grow.
Since GO.com is a start-up business, and therefore it is critical that we build market share now to ensure long-term profitability. On a year-over-year basis for the quarter, our average daily page views across our sites increased 91% to 72 million, and we are continuing to build our sites to be market leaders. ESPN.com, Disney On-Line, and ABC.com are all number one in their respective categories and ABCNews.com is growing faster than its chief competition.
GO.com is on track and even exceeding expectations on several fronts, while simultaneously building the platform that our company will use to become a leader on the Internet. The combination of our ongoing business integration with Infoseek, normal seasonality, and our ongoing development of the GO.com portal will likely result in some softness in our results during the next couple of quarters. Although these steps may impact short-term performance, they are necessary to ensure the long-term success of GO.
While we are definitely encouraged by recent results across GO.com and the rest of Disney, we remain focused on the future and on capitalizing upon the long-term growth potential of The Walt Disney Company's assets both through our traditional businesses and through new avenues like DVD and the Internet.
Since 1945, Disney's earnings growth has averaged more than 16% a year. By pursuing growth initiatives, never losing our fundamental focus of the quality of our products and supporting ongoing development of our brands, The Walt Disney Company is determined to return to the earnings growth it has delivered for decades.
Related Links
- February 23th Orlando Sentinel article
Reports on Eisner's comments to stockholders. - February 23rd
Orange County Register article
Reports Eisner's comments to stockholders confirmed Disney's strength is their theme parks and Go.com is expected to post losses for two more quarters before beginning a recovery. - Disney Investor Relations Official Site
-- Posted February 23, 2000
Source: Company Press Release