Walt Disney Company yesterday announced fourth quarter profits down by 77% to $63 million, attributing its lacklustre performance to changes in accounting procedures and e-business losses.

However, EBITDA (earnings before interest, taxes and amortization) rose 22% to 28 cents per share – well ahead of most analysts’ predictions.

Two main factors contributed to the losses: the fall in value of Disney’s stake in technology group Inktomi; and costs associated with last year’s closure of toysmart.com.

On the plus side, record attendances at Disneyland and Walt Disney World boosted revenues by 9% to $1.7 billion, while a buoyant performance by the film division (thanks to Toy Story 2) also resulted in increased profits.

However, in common with most online ventures, a sorrier tale was told by the Walt Disney Internet Group, where income fell 5% compared with pro forma revenues in the same period in 1999, and losses zoomed to $99.1m ($74.1m in the previous quarter).

Disney plans to absorb the cash-hemorrhaging division into the main company.

News sources: The Times (London); Advertising Age - Interactive Daily