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A Disney Year

The calendar year started out terribly for entertainment giant Disney (NYSE: DIS  ) but closed with potential as the company was able to steer its way back toward respectable growth.

Let's take a peek at the timeline.

Who will ink the next wave of animated Disney classics? It was a fair question to ask after the company shuttered its Florida animation studio. Making matters worse, if Disney was assuming that Pixar (Nasdaq: PIXR  ) would continue to bail Disney out of its in-house shortcomings, the computer animation specialist announced that it would find a new distributor for its classy features once its 50-50 deal with Disney ran its course.

In another slap to Disney's managerial performance, Comcast (Nasdaq: CMCSA  ) made a hostile buyout bid for Disney that translated into a small premium to Disney's going share price but well off the stock's all-time high. In other words, if Eisner and his cronies weren't going to milk Disney's assets, Comcast had warm hands at the ready.

The company's annual shareholder meeting in Philadelphia promised more fireworks than one of Disney's nighttime park displays with unhappy pension fund managers looking for answers and the dissident group led by former board members Roy Disney Jr. and Stanley Gold gripping the battering ram. In a huge "no confidence" vote, 43% of the shares voted against keeping CEO Michael Eisner on the company's board. Unable to ignore the hungry masses, the company's board had Eisner swap board titles with George Mitchell. It was a small gesture, but something had to be done to pacify the surprisingly large and vocal discontented masses.

Disney's latest in-house animated full-length feature, Home on the Range, tanked at the box office. Still concerned, five state pension funds asked for a private meeting with Eisner to gauge what his intentions were to turn the company around. One can only hope that plan B wasn't Home on the Range 2.

Critics paused long enough to check out Disney's fiscal second-quarter results -- and were at a loss because the company's numbers were pretty good. Revenues rose by 11% as profits climbed to $0.26 a share from $0.15 a share in fiscal 2003. The company guided investors to expect earnings to clock in at $0.98 a share for the year.

DreamWorks Animation (NYSE: DWA  ) released Shrek 2. It's a significant event as the rival's sequel to the Disney-bashing original rakes in enough green to become the highest grossing animated film of all time.

Giving Disney some credit, Standard & Poor's upgraded Disney's corporate debt rating.

Another quarter, another improved showing. Disney's fiscal third quarter had earnings climb 29% higher, and the top line rose by 17%. Bringing Disney's mouse to the desktop mouse, Disney rolled out its Disney Dream Desk personal computer at a steep $950 price point given its limited starter PC specs. Did the move compute? With the company growing, there were few doubters left to question the blue mouse-eared system.

After the March turmoil Eisner probably sensed that it made sense to announce his eventual resignation while the going was good. He revealed that he would step down come September 2006. While he singled out COO Bob Iger as his choice for successor, the board was going to mull over the possibilities and eventually set a June 2005 deadline to name Disney's next CEO. ESPN, at times the company's most dependable asset, turned 25. ABC, after years of struggling to attract viewers, came back strong in the fall on the heels of successful new shows such as Lost and Desperate Housewives.

After struggling to make its namesake stores work, Disney sells off its Disney Stores franchise to Children's Place (Nasdaq: PLCE  ) and launches its site to replace its original virtual storefront.

How good was fiscal 2004 for Disney? Remember that $0.98 a share mark in projected profitability that had won analysts over six months earlier? The company ultimately produced earnings of $1.12 a share -- an 81% improvement over the previous year's depressed levels. Pixar's The Incredibles also opened strongly.

With attendance growth at all of its theme parks despite a trying year that included four Florida-bound hurricanes, Disney announced an aggressive price hike for its one-day tickets, preserving the value of extended stays by discounting multiday passes. announced that it would not be proposing an alternate slate of directors for the next annual meeting.

How do you think Disney fared during 2004? What are your expectations for the company in 2005? All this and more -- in the Disney discussion board. Only on

Longtime Fool contributor Rick Munarriz has owned shares of Disney since the 1980s. He also owns shares in Pixar. He is a member of theRule Breakersanalytical team, seeking out tomorrow's great growth stocks a day early.

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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