DreamWorks 4Q falls short of expectations

AP News
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Posted: Feb 24, 2011 7:18 PM
DreamWorks 4Q falls short of expectations

DreamWorks Animation SKG Inc. said Thursday that its fourth-quarter profit nearly doubled thanks to a one-time tax benefit. Absent the benefit, the adjusted earnings fell below analyst expectations, as did revenue, partly because its year-end movie "Megamind" did not perform as well as expected.

Net income at the Glendale, Calif.-based studio in the three months through Dec. 31 came to $85.2 million, or 99 cents per share, compared with $43.6 million, or 50 cents per share, a year earlier.

Revenue rose 42 percent to $276 million from $194 million.

Adjusted to exclude a one-time tax benefit of $45 million, earnings came to 47 cents per share, below the 75 cents expected by analysts polled by FactSet.

Included in the results were a couple big write-downs in the quarter: a $15 million loss on its virtual world based on the movie "Kung Fu Panda" and a $10 million loss on the Shrek the Musical touring show. The company is now exploring other ways to make money in these non-movie areas.

Revenue also fell short of the $291 million expected by analysts.

In the week leading up to its earnings release, several analysts lowered their earnings expectations for DreamWorks based on a worse-than-expected box-office performance of "Megamind," a wacky bad-guy-turns-good comedy starring Will Ferrell.

Last year was the first time it released three movies in one year, up from the typical two, and included "How to Train Your Dragon," "Shrek Forever After," and "Megamind."

Although together they grossed $1.6 billion at box offices worldwide, Chief Executive Jeffrey Katzenberg edged back from a commitment to release three movies every other year, a goal the company set in 2009.

"Today, we would say to you, 'No movie before its time' is our mantra," Katzenberg told analysts on a conference call. "If that results in two movies per year instead of three, we're fine with that."

Shares fell 27 cents, or 1 percent, to $27.83 in after-hours trading Thursday, after closing up 7 cents at $28.10 in the regular session.