DreamWorks swings to profit on strong Shrek sales
By Sue Zeidler
LOS ANGELES (Reuters) - DreamWorks Animation SKG Inc on Tuesday swung to a quarterly profit after a loss a year ago, beating Wall Street forecasts with help from the strong performance of the DVD release of "Shrek the Third."
Fourth-quarter net income was $94.1 million, or 98 cents per share, compared with a loss of $21.3 million, or 20 cents per share, for the year-earlier quarter.
Revenue rose to $290.2 million from $204.3 million.
Analysts, on average, had forecast earnings of 72 cents a share on revenues of $274.5 million, according to Reuters Estimates.
DreamWorks shipped 15.6 million "Shrek the Third" DVD units worldwide, which was below the 33 million "Shrek 2" units sold in that DVD's first quarter of release.
The latest title contributed $179.4 million to fourth-quarter revenues, primarily through its release into the home video market and international box office receipts.
Analysts had projected a range of 9 million to 13 million units would ship in the fourth quarter, when competition in the home video market was heated.
"'Shrek the Third' DVD was not as bad as people feared, but on the other hand, it's below what they did on 'Shrek 2'," said JP Morgan analyst Barton Crockett, who said earnings overall beat his expectations.
The performance of "Bee Movie" was not as robust, however. The film, released to theaters in the fourth quarter, tallied $126 million at the domestic box office and $159 million internationally, DreamWorks said.
Analysts said that fell shy of projections of $300 million and was not enough to make the film profitable. DreamWorks said it expects "Bee Movie" to be profitable but that its success depends on how it performs when released in the home video market, scheduled for next month.
DreamWorks also announced it has pushed back the release of "How to Train Your Dragon," in "Ultimate" 3-D, to March 26, 2010, from fall 2009. The studio's first film in "Ultimate" 3-D, "Monsters vs. Aliens," is scheduled to be released in the United States on March 27, 2009.
On a conference call, Chief Executive Jeffrey Katzenberg said he expects the 3-D market to take off industrywide.
"I think going into 2010, there seems to be a lot of 3-D product, and it's coming in a very orderly way," he said.
Due to the schedule change, DreamWorks will only release one major film in 2009 in a departure from its usual two films per year, but then plans to release three in 2010.
"They'll only have one release with 'Monsters vs. Aliens' in 2009 and then go 12 months without another movie, which is an uncomfortably long period for this company, which usually aspires to two releases a year," Crockett said.
DreamWorks expects 2008 results to be driven primarily by the release of "Kung Fu Panda," which opens domestically on June 6, 2008.
DreamWorks said it expects to earn a significant portion of its 2008 earnings in the second half of the year after distribution and marketing costs for "Kung Fu Panda" have been recouped by its distributor, Viacom Inc's Paramount Pictures.
The latest quarter's results also included a tax benefit of about $49.4 million, which resulted in a lower effective tax rate. This benefit was offset by a $42 million increase in the income tax benefit payable to the stockholder.
Reuters
