Disney buys Club Penguin, profit up

The company also announced on Wednesday it had purchased kids' virtual world Club Penguin for $350 million in cash plus up to $350 million more depending on the Web site's earnings in 2008 and 2009.

Disney Chief Executive Robert Iger said he expects the Club, in which children control, dress and communicate through animated penguin avatars who live in an icy virtual world, to begin contributing to the company's bottom line in its first year as Disney's Club Penguin.

Disney, which runs the ABC and ESPN TV networks and produces shows through its ABC Studios division, said its fiscal third quarter net income from continuing operations rose to $1.196 billion, or 58 cents a share, from $1.095 billion, or 51 cents a share one year ago.

The 58 cents per share topped the average analyst forecast of 55 cents according to Reuters Estimates.

Revenue rose 7 percent to $9.045 billion.

"FIRING ON ALL CYLINDERS"

Analyst David Miller of SMH Capital said Disney shares often fall following a pre-earnings run up. Shares had closed up 2.5 percent for the day.

"The company is firing on all cylinders. The fundamentals remain very good. If you believe in the earnings power for the media networks in fiscal '08 then the stock looks very cheap," Miller said.

Disney shares were off slightly in after-hours trading at $33.66 from a close of $33.83 on the New York Stock Exchange.