DreamWorks profit up on "Shrek the Third"

By Sue Zeidler

LOS ANGELES (Reuters) - DreamWorks Animation SKG Inc (DWA.N: Quote, Profile, Research, Stock Buzz) posted higher profits on Tuesday, helped by the international demand for "Shrek the Third," but warned that the domestic DVD release of the hit animated film will face unprecedented competition in the fourth quarter.

Industry watchers in the fourth quarter will also be monitoring the performance of DreamWork's "Bee Movie," which opens on November 2 and marks comedian Jerry Seinfeld's first try at starring in, producing and co-writing a big Hollywood film.

DreamWorks on Tuesday said it does not expect to generate significant revenue in the fourth quarter from "Bee Movie" as its distributor will likely not have recouped the upfront marketing and distribution costs.

But the stock of the Glendale, California-based studio, which releases only two films a year, is likely to fluctuate on the movie's box office performance, analysts said.

J.P. Morgan analyst Barton Crockett said he is forecasting "Bee Movie" to have an opening weekend box office tally of between $47 million and $50 million, and to ultimately garner between $181 million and $190 million domestically and the same amount internationally.

For the third quarter, DreamWorks reported net income rose sharply to $47 million, or 47 cents per share, from $10.5 million, or 10 cents per share, a year earlier. Revenue jumped to $160.8 million from $55.6 million a year ago.

Analysts on average forecast earnings of 46 cents per share on revenue of $164.2 million, according to Reuters Estimates.

DreamWorks said "Shrek the Third" was the largest driver of the third quarter, contributing about $92.1 million in revenue, primarily from international box-office receipts. To date, the film has generated $793 million in worldwide box office and ranks as the third highest-grossing animated film.