World Wrestling Entertainment Inc. (WWE) recently reported its third quarter results. The company posted a robust earnings growth of nearly 68% to $8.9 million from $5.3 million in the year-ago quarter. Earnings per share came in at 12 cents, compared to 7 cents last year and surpassed the Zacks Consensus Estimate by 33%, or 3 cents.

The Stamford, CT-based company’s revenues grew by 2.3% to $111.3 million, compared to $108.8 million last year. In terms of segments, Live and Televised Entertainment, the flagship segment, recorded a 13.4% year-over-year expansion in revenues to $77.9 million. The growth was driven by higher average attendance Incorporatedrease in international events and higher television rights fees received primarily due to a new WWE Superstars television show.

Consumer Products segment fell 13.5% to $23 million reflecting a reduction in royalties on toys and videogames coupled with lower magazine subscription revenues. Digital Media segment contracted 6.3% to $7.4 million primarily due to a decline in online merchandise sales, while WWE Studios segment recorded a decrease of 46.4% to $3 million.

In terms of geographic regions, North American revenues dipped 2.3% year over year to $81.3 million, while that from Europe, Middle East and Africa (EMEA) declined 15.8% to $14.4 million. However, revenues from Asia Pacific region jumped 83.8% to $12.5 million, while Latin American region posted a growth of 82.4% to $3.1 million.

Gross profit (revenues less cost of revenues) expanded 20.5% year over year to $51.2 million, while gross margin grew by 690 basis points (bps) to 46%. The growth was driven by higher efficiencies in the Live and Televised Entertainment segment, staff reductions as well as lower costs in marketing and TV production. Selling, general and administrative expenses increased 5.8% year over year to $33.1 million due to higher incentive compensation.

WWE ended the quarter with cash and cash equivalents of $152.7 million, compared to $119.1 million in the year-ago period. During the first 9 months of this year, the company utilized $61.6 million towards payment of dividends and $3.6 million towards capital expenditure. The company also utilized $41.5 million towards purchasing marketable securities over the same period, while proceeds from matured investments were $45.6 million.

Moving forward, WWE expects earnings to grow at an average annual rate of 15% to 20% through 2012. This calculates to full-year earnings of roughly 71 cents to 74 cents per share, compared to the Zacks Consensus Estimate of 68 cents derived from 7 covering analysts.

The company also expects approximately one-third of total revenue growth and more than 40% of earnings growth to come from leveraging its global television franchise and licensing platform, bolstered by a deal with toy making giant Mattel Inc. (MAT). WWE entered into the multi-year licensing agreement in February last year under which Mattel will develop and market products featuring WWE brand and superstars, which are scheduled to be launched in 2010.

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