Let's go through his concerns, leaving no shot unturned. Both gross and net margins improved in the December quarter. Analysts expect that to continue. Disney is, and will continue to be, a money machine. Even though earnings dipped in 1998 and 1999, cash flow from operations continued to set new highs.
Entertainment is a leveraged industry.
Disney is one of the few players who have been able to manage its borrowings to produce consistent profitability. Until 1999, Time Warner had reported losses in 11 of the past 12 quarters. Disney is run with greater attention to the bottom line. Disney is asset-rich enough to take on the debt. It borrows at attractive rates, then employs the capital to grow its business through development and acquisitions.