WWE Needs to Diversifyhttp://www.fool.com/investing/general/2012/04/11/wwe-needs-to-diversify.aspx Eric Volkman
April 11, 2012
Wham! World Wrestling Entertainment (NYSE: WWE ) crushed a company record for event sales with the latest version of its annual extravaganza, WrestleMania. The event grossed $8.9 million -- a nice chunk of change, but the company needs more than a full house at its big event to get back on the growth wagon.
No longer on steroids
A better opportunity for growth lies in international expansion. After all, the company actively produces shows all over the world, including hot economic regions like Asia. However, it also seems stuck overseas. The 2011 take from outside North America fell slightly year over year, while its percentage of overall revenue didn't budge, at 28%.
The only significant line item rising to any degree is the company's spending. Cost of revenue grew in both the company's latest reported quarter and fiscal year, at a respective 17% and 15% clip year over year. Yikes. Compounding this is the company's habit of blowing out its free cash flow via the payment of generous dividends. This is pleasant for shareholders in the short term, who are enjoying the stock's relatively high yield (nearly 6% at the moment), but it's clearly unsustainable.
DiversiMania should be running wild