Wednesday, August 01, 2007

DreamWorks Tuesday

DreamWorks reported mucho big profits for the second quarter...

Shrek the Third turned DreamWorks Animation's (NYSE: DWA) latest earnings report into nothing short of a fairy tale. Revenues nearly tripled to $222.5 million. Earnings per diluted share also delighted, powering up to $0.60 compared to $0.13 per share last year. The current results include an $0.11-per-share benefit related to the reduction of reserves and marketing costs involving a transition to new distributor Paramount, as well as a $0.04-per-share tax benefit. Even so, I'm impressed.

Talk about magic. Shrek the Third opened to an awesome $122 million box office take, and has grossed about $320 million to date at the domestic box office, according to Taking into account international revenues, the sequel is closing in on $720 million. Poor Disney (NYSE: DIS). DreamWorks Animation's archcompetitor is being overshadowed this summer, even though it has a Pixar title in the marketplace, Ratatouille. DreamWorks Animation is proving, in fact, that its super franchise can hold its own against the major guns from studios like Time Warner (NYSE: TWX), Sony (NYSE: SNE), Viacom (NYSE: VIA), and News Corp. (NYSE: NWS).

To be certain, this isn't much of a surprise. I think most observers realized that Shrek would be a formidable hit. What many Wall Street analysts didn't count on was the profit potential for the company's second quarter. The belief circulating around the hallowed halls of the institutions that set market expectations was that DreamWorks Animation would yield about $0.31 in earnings per share after special items. Quite off the mark, wouldn't you say?

And I was trudging around the halls of DWA the day the happy financial reports came out...

The Bee Movie, the next DreamWorks animated feature up for release, is just now finishing its last few weeks of production. The Bee artists I talked to were looking forward to jumping over to Kung Fu Panda, now a little past mid point in production.

DreamWorks has been hiring new staff for the slate of pictures it's got in the pipeline, and we've been holding a bunch of orientation lunches with them to explain the benefits offered by the Motion Picture Industry Pension and Health Plan.

Along the same line: I had a long talk with an cg artist who's jumped back and forth between several studios. He told me about a stretch of work he did at Sony Pictures Imageworks, and had the same observations that I've heard from others: It's an okay place to work, but the drive to Culver City is a pain, and the fact that SPI (unlike Sony Pictures Animation) isn't under the Pension and Health Plan is a big disincentive to working there long term.

"The business should really be covered by one pension and health plan, so there's a level playing field everywhere and people are getting consistent benefits. I tried to tell this to a SPI employee who's worked for the company his whole career. He has a hard time seeing this because he's never worked anyplace else."

I replied that would be great, and that organizing all the animation facilities in town is an ongoing goal. All we need is willing employees at the different companies to sign rep cards.


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