The New York Times cites analysts who think DreamWorks Animation will be encountering a bump in the road:
In forecasting a negative surprise for DreamWorks, StarMine heavily weighted the views of Drew E. Crum, a Stifel Nicolaus analyst who recently lowered his quarterly estimate of DreamWorks’ earnings to 66 cents a share, versus a consensus of 86 cents a share. Reached by telephone, Mr. Crum said the studio’s “Bee Movie” has had “disappointing” domestic box-office figures, estimating revenue of $127 million versus his earlier expectation of $155 million. And DVD sales of “Shrek the Third” will also disappoint, he said. He expects that shipments of the DVD in its first four weeks of availability will be just half the number for its predecessor, “Shrek 2,” in the comparable initial period in 2004.
Despite lowering his forecast, he kept a buy recommendation on the stock, citing what he called reasonable valuation.
My thinking has always been that a company -- any company -- constructs itself a challenging business model when the basic math requires that the co. hit a home run ... or at least a triple ... everytime it steps up to home plate.
The fact that Bee Movie is "disappointing" after taking a domestic gross of $127 million is a reality to ponder. Few films make it to $100 million. (And yeah, I know that the break-even is high because the budgets of DreamWorks' cg films are high.)