Tuesday, February 27, 2007

DreamWorks Reports

Since we started in on DreamWorks Financials yesterday, let's follow through with a final report today. (Great day to come out with your stock perfromance, yes?)

DreamWorks Animation SKG Inc., maker of the ``Shrek'' films, reported a fourth-quarter loss after writing down the value of the animated film ``Flushed Away,'' and said the company will buy back $150 million in stock.

The net loss was $21.3 million, or 20 cents a share, compared with net income of $63.2 million, or 61 cents, a year earlier, Glendale, California-based DreamWorks said today in a statement. Sales, rose 18 percent to $204 million, exceeding the $150.5 million average analyst estimate compiled by Bloomberg.

DreamWorks lowered the value of ``Flushed Away'' by $109 million after its British humor was lost on U.S. audiences. The failure prompted Chief Executive Officer Jeffrey Katzenberg to end a partnership with U.K.-based Aardman Animations Ltd. Losses from the movie overwhelmed DVD sales of ``Over the Hedge.''

``The writedown was more than we expected,'' said Los Angeles-based Sanders Morris Harris analyst David Miller, who has a ``buy'' rating on the shares and doesn't own any.

The buyback, amounting to 6.4 percent of DreamWorks's shares, helps mop up shares sold by billionaire Paul Allen, who sold $224 million in DreamWorks stock in November.

Shares of DreamWorks Animation fell 84 cents to $26.80 at 4 p.m. in New York Stock Exchange composite trading. They have declined less than 1 percent in the past year.

Not a big surprise that DWA stock fell today. There were lots of headwinds (like a frigging hurricane). But we're betting that Shrek the Third will be a little bit of all right for the company's upcoming bottom-line.

Update: Now that the unpleasant news is behind DW, some analysts are recommending a "buy" move on DreamWorks stock. Like for instance:

NEW YORK, February 28 (newratings.com) - Analyst Michael Savner of Banc of America Securities reiterates his "buy" rating on DreamWorks Animation (FKP.ETR). The target price is set to $37.

In a research note published this morning, the analyst mentions that the company has reported its 4Q results ahead of expectations. DreamWorks Animation has announced a $150 million share repurchase authorization, the analyst says. The release of Shrek III in May and Bee Movie in 2007 are expected to lend upside to the company’s share price


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