Walt Disney, the entertainment group, yesterday said the aggressive scaling back of its internet operations over the past year would allow them to reach profitability during 2002.

In a letter to shareholders, chairman and chief executive Michael Eisner also detailed plans for further cost cutting - this time among its retail operation. The group intends to shut a further 50 Disney stores in addition to the 50 already closed.

Disney, which includes theme parks, the film-making business and US television networks ABC and ESPN, cut more than 4,000 jobs last year - about 3% of its workforce. It is wrestling with lower advertising revenues and the weaker economy has hit attendance at the group's theme parks.

The group closed its internet portal Go.com 12 months ago and pared back operations at the Disney Internet Group, integrating websites into existing business divisions. Go.com had been the centrepiece of Disney's internet strategy but was closed because the advertising community had "abandoned" the web, Mr Eisner said at the time.

Further cuts outlined yesterday included a reduction in the annual investment in live action movies by $600m (£420m) and a streamlining of Disney's purchasing policy, which has saved $200m.

"A great number of steps have been taken to safeguard Disney during these anomalous days," Mr Eisner said.

He identified a number of "challenges" facing the organisation, including the failure of the expanded Disneyland in California if it is to meet targets. "We are now officially in a recession and people have less disposable income to travel," he said.

The ABC network, he added, had suffered "the one-two punch of a down economy and a drop in ratings". He said the efforts to develop programming that will win back viewers is a top priority. "Primetime does present a problem and we are determined to solve it."

The letter suggests that markets outside the US will be the chief focus for growth, including the launch of a set of mobile phone services in the UK later this year.

A second theme park has opened in Tokyo and work is progressing on Hong Kong Disneyland - what Mr Eisner described as a "beachhead for the Disney brand in the most populous nation on Earth". A second theme park in Paris is also planned.