The Walt Disney Co. (NYSE:DIS) plans to buy back up to $8 billion in stock next year, the entertainment giant’s Chief Financial Officer Jay Rasulo said Thursday.
Speaking at the Bank of America Merrill Lynch 2013 Media, Communications & Entertainment Conference in Beverly Hills, Calif., Rasulo said the share repurchase emphasizes confidence in the company's financial strength. In recent years, Disney has been on a spending spree to upgrade its capital assets.
"We've been buying at the pace of $4 billion for the last couple of years. And we really see the opportunity, given where our share price is, given where capital markets are, to target at least $6 billion and possibly up to $8 billion in buybacks," he said, according to Agence France-Presse.
The Burbank, Calif., company's buyback comes as its capital spending shrinks from a peak of $3.78 billion in fiscal 2012. In addition to expanding its entertainment parks in California and Florida, Disney has also added cruise ships and a resort in Hawaii to its capital assets. But after years of spending, capital expenditure has declined in the current year.
“Based on the investment we have been doing, we will see an increase in cash flow,” Rasulo said, according to a Bloomberg News. “We just worked our way through a huge capital cycle.”
He said the company will continue to invest in new projects and acquisitions and will maintain its "single-A" debt rating.
"I want to emphasize that we won't do this and don't need to do this by bringing our debt rating down," Rasulo said in published reports. "We're very, very conscious of the strategic value of our single-A rating; we think we can accomplish that buyback while maintaining that single-A rating even though we will probably be doing some borrowing at the tail end to provide the capital for that plan."
Disney has reported robust quarterly performance in recent years and topped analysts’ earnings estimates in each of the past nine quarters. The company repurchased $800 million in stock in its fiscal third quarter and $3.2 billion so far in the year, Bloomberg reports.
Disney's shares have gained 32 percent so far this year. In Thursday trading, shares rose 2.4 percent to $65.49.