What would Walt do?

Elea Nit, a full-time mother of two, sorts through a pile of Princess T-shirts in a Disney Store here, apparently dissatisfied.

"I hear they're closing a bunch of these stores," she says, "I'm not surprised.... The prices are much higher than they need to be," she says, picking up a stuffed Pooh bear.

She might easily be reciting from Roy Disney's letter of resignation. He and two other Disney board members stepped down this week, amid a swirl of publicity, charging that the Magic Kingdom is being mismanaged.

Ms. Nit, a US-born Israeli, points at the piles of Princess merchandise, a line of products based on classic Disney heroines. "They're just running the old stuff into the ground," she says. Motioning to a pile of "Lilo and Stitch" dolls, she adds, "when they try something new, it's just awful. Who wants to see such a crazy, mean creature?"

Charges that the Disney company has lost its way under current company head Michael Eisner are not new. But the departure of the final Disney family member from the fabled company has thrown the charges into a new relief. "Clearly there has been an emotional attachment to the Disney name in our culture for a long time," says George Geis, associate dean at the UCLA Anderson School of Management. "The fact that the only son of the company's cofounder is departing and with such acrimony, is bringing the company to a level of attention that it wouldn't have ordinarily had."

One of the ironies of the current dispute, say some pundits, is that Roy Disney helped bring Mr. Eisner on board back in 1984. In Eisner's early days, the company enjoyed what most analysts consider a renaissance in its core business of animated feature films, leading to the first ever Best Picture nomination for an animated film, 1991's "Beauty and the Beast."

Since then, the economy has nosedived and Disney's core animation and theme-park businesses have been battered by the competition. Mr. Disney and his fellow departing board members charge that the company is pushing profits over innovation and quality. They point to the numerous straight-to-video sequels of Disney's classic titles such as "Cinderella" and "Aladdin." Even one of the company's recent bright spots, this summer's hit "Pirates of the Caribbean," is based on an old Disneyland ride. Two other attempts to turn dated theme-park attractions into movies, "Country Bears" and the current "Haunted Mansion," have either tanked or been savaged by critics.

But more critical to the company's future, says Mr. Geis is the image the company has in the public mind. Disney has lost the special place it once had. "Typically, when people looked at the studios in Hollywood," he says, "they put Disney in a class by itself." That image has taken a beating by everything from fatal accidents at both Disneyland and Disney World to the current flap over Disney's association with the foul-mouthed holiday film "Bad Santa" and the ultra-violent "Kill Bill," both of which were produced by Disney-owned Miramax.

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