On Tuesday, Marvel reported that its second quarter net income increased 78.5% to $29.1 million, earnings per share increased from 19 to 34 cents, and operating income rose a whopping 111% to $56 million compared to the same period a year ago, but those numbers weren't what was expected and Wall Street rewarded the shortfall with an 8% drop in its stock value by market close.


While the licensing and publishing segments did well (licensing revenue increased 45% to $49.3 million and publishing revenue increased 31% to $32.9 million during Q2), toy sales were soft, declining 24% to $19.3 million from the same period in 2006. Marvel was banking on strong toy sales behind Spider-Man 3, since character-driven movies historically give a boost to that segment, but there is a lot of stiff competition on the shelves this year, mostly in the shape of Transformers.  Marvel also pointed to the remaining shift of toy production to master-licensor Hasbro.  In response to disappointing toy sales, Marvel announced it has adjusted its income forecasts for that segment for the rest of 2007.


The strong performance by the licensing segment is credited to the record-breaking Spider-Man 3 box-office take, while the publishing division success is credited to the high unit sales for Civil War and Dark Tower series.