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View Full Version : DreamWorks sees qtly loss, says SEC launches probe


mangolass
07-11-2005, 06:56 PM
http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh27227_2005-07-11_17-31-38_n11730994_newsml



DreamWorks said it expects a second-quarter loss in the range of 7 cents to 9 cents per share, down from a previous forecast of "no profit." It cut its full-year outlook to a profit of 80 cents to 90 cents a share, down from $1.00 to $1.25 a share previously.

The outlook marked DreamWork's second profit warning in two months. In May, it said full-year results would be hurt by poor video sales of "Shrek 2."

Some analysts believe there is a fundamental change in the way that DVDs are sold at retail stores. Although overall DVD sales have risen, studios are releasing more and more titles, raising the competition for shelf space in stores.

As a result, retailers are quicker to return unsold videos to the studios.

DreamWorks said it reviewing home video sales, retail inventory levels and returns.

"It's too early to come to any conclusions," said DreamWorks Animation Chief Executive Katzenberg in a conference call. "There is a tremendous amount of product in the marketplace. It's obviously much more crowded than it has been before. We don't know if this is a short-term issue of if some larger shift is going on."

JPMorgan analyst Spencer Wang in a research note said that the large Hollywood studios tend to be insulated from the new trend because they can offset the lower sales of individual titles with a greater number of video releases.

Sanders Morris Harris analyst David Miller noted the changing climate for home videos.

"The downward revision underscores how much of an event DVD releases of hit theatrical product have become of late, as any unsold product is immediately returned, rather than marked down at retail and sold at a discount," he said in a note.

DreamWorks also said it will not proceed at this time with a proposed secondary offering of $500 million of its Class A common stock, citing its current share price.

Shares of DreamWorks were down $3.79 at $23.02 in afternoon trade on the New York Stock Exchange, after earlier hitting a record low of $22.90. DreamWorks went public last October at $28 a share and hit a record high of $42.60 in early December.

The planned stock offering was to have involved the sale of shares held by principal shareholders, and would not raise any money for DreamWorks.

DreamWorks also said it has received a request from the Securities and Exchange Commission and is voluntarily complying with an informal inquiry concerning trading in its securities and the disclosure of its financial results on May 10, 2005.

The SEC said the informal investigation should not be construed as an indication that any violations of law have occurred, and DreamWorks said it intends to cooperate fully with the inquiry.

The company has been sued by investors who accused it of artificially inflating the outlook for sales of "Shrek 2" to pump up the share price ahead of the secondary offering.


LT

Shaderhacker
07-11-2005, 08:15 PM
Their stock is collapsing. $22.00/share.. :sad:

-M

worker_bee
07-11-2005, 09:26 PM
Their stock is collapsing. $22.00/share.. :sad:

-M

Yikes..they are just below Disney's stock price now...are we in an alternate universe??
Well Madagascar only dropped 20% from last weekend and is now at about $180 million.

Shaderhacker
07-11-2005, 10:14 PM
Yikes..they are just below Disney's stock price now...are we in an alternate universe??
Well Madagascar only dropped 20% from last weekend and is now at about $180 million.

Well, here's the close figures:

DWA - $23.27
DIS - $25.18
PIXR - $42.75

Disney's stock was a little higher a year or so ago but I think they are pretty stable. Iger recently was able to talk Roy out of suing Disney concerning the Board of Director's tatics on choosing a CEO successor. This bodes well for Disney. Pixar's stock is already too high IMO.... That leaves Dreamworks. Mad should come very very close to $200M, but I don't think that will help them much. Shrek 3 is another year and a half away so they have to rely on their next 3 movies (Wallace&Grommit, Flushed Away, and Over the Hedge) to put them back in a comfortable profitable spot. Hmm....this is getting hairy indeed..

-M

ThePumpkinKing
07-11-2005, 10:56 PM
Yeah, Pixar's stock is way too high. Disney, I agree, is stable, but expect it to drop next year when eisner resigns. Still, they're not going anywhere.

richcz3
07-11-2005, 11:46 PM
This article is always worth reading See > LINK (http://www.pbs.org/wgbh/pages/frontline/shows/hollywood/)

jeremybirn
07-12-2005, 07:50 AM
Comparing value per share between companies (without any regard to how many shares there are) is pretty much meaningless. Value per share can change with events such as when a stock splits - when stocks split, the value per share is cut in half, but you get twice as many shares to make up for it - and that's happened to most of the companies being discussed. The actual value that the market thinks a company is worth is shown by the total market cap, which indicates what's invested in terms of the number of shares as well as the value per share:

DWA - $2.4 Billion
DIS - $51.4 Billion*
PIXR - $5.1 Billion

*This includes the theme parks, TV networks, etc., not just an animation studio.

Of course, stock prices are fun to compare too, but only by watching what percentage they gain or lose. Yahoo will give you a graph of the comparison Worker_Bee brought up, comparing the history of Disney (DIS) and Dreamworks Animation (DWA) stock prices since DWA shares were first offered last fall:

http://finance.yahoo.com/q/bc?s=DWA&t=1y&l=on&z=l&q=l&c=DIS

-jeremy

percydaman
07-12-2005, 12:33 PM
ya i always knew it was meaningless to compare stock prices, with stocks splitting and stuff. DIdn't know about the total market cap though. Thanks for the info.

Shaderhacker
07-12-2005, 05:39 PM
Comparing value per share between companies (without any regard to how many shares there are) is pretty much meaningless. Value per share can change with events such as when a stock splits - when stocks split, the value per share is cut in half, but you get twice as many shares to make up for it

This is true.

I still think that Pixar's stock is overvalued. For a company that ONLY makes 3d animated films is .... well.....overhyped.;)

-M

arctor
07-12-2005, 06:46 PM
Pixar also makes the industry standard implementation of renderman...nothing to sneeze at....not to mention a perfect track record at the box office.

jeremybirn
07-12-2005, 07:37 PM
Shaderhacker - You might be right, who knows, but there was just an article from someone saying this could be a good time to buy dreamworks shares:
http://www.forbes.com/markets/2005/07/12/dreamworks-pixar-animation-0712markets04.html
SO maybe the value difference is just that Dreamworks is low, not that Pixar is high. We'll see. The only decision I make is when to excercise my stock options. I didn't jump at the little upswing that Pixar went through in May and June, because I didn't want to excercise in a year when there's no film coming out, and I want to see how much better it could do next year. Will I be right? We'll see.

-jeremy

mangolass
07-12-2005, 11:24 PM
Thank you for all of the information about stocks. I guess it makes sense that you discuss this like investors if you all have stock options from your studios.

What do you think this means for CG artists or future CG artists? Does the fact that Dreamworks isn't making money mean that the "boom" in CG is comming to an end, or will the CG industry not grow as rabidly as it did before?

LT

Shaderhacker
07-13-2005, 01:25 AM
Pixar also makes the industry standard implementation of renderman...nothing to sneeze at....not to mention a perfect track record at the box office.

I don't think (IMO) that Renderman is the industry standard. It's a very common renderer, but there seems to be a good distribution of custom renderers out there not to mention Mental Ray getting more of some attention.

In any case, this still isn't enough to warrant the price of their stock...IMO.

-M

Shaderhacker
07-13-2005, 01:36 AM
Shaderhacker - You might be right, who knows, but there was just an article from someone saying this could be a good time to buy dreamworks shares:
http://www.forbes.com/markets/2005/07/12/dreamworks-pixar-animation-0712markets04.html
SO maybe the value difference is just that Dreamworks is low, not that Pixar is high


Well, I guess we'll have to wait and see.

This link gave me a bit of a shock for Dreamworks too:

http://moneycentral.msn.com/investor/research/wizards/srwtarget.asp?Symbol=dwa

I really think this is due to poorly predicted schedules, overconfident estimation of profits on 'mediocre' features, persistant layoffs after each film's end date, lackluster story development, and increased ramp-up time to integrate proprietary pipelines to the southern studio.

-M

Shaderhacker
07-13-2005, 01:37 AM
What do you think this means for CG artists or future CG artists? Does the fact that Dreamworks isn't making money mean that the "boom" in CG is comming to an end, or will the CG industry not grow as rabidly as it did before?

LT

I don't think this will effect any of the other studios at all in the short term. Long term? We'll have to sit back and wait..

-M

jeremybirn
07-13-2005, 03:21 AM
Does the fact that Dreamworks isn't making money mean that the "boom" in CG is comming to an end, or will the CG industry not grow as rabidly as it did before?

There was a thread about this a while ago, somehow I can't find it... all that's changing is that the "free ride" that some CG features got, where every colorful CG-animated comedy was automatically a hit, that free-ride seems to be ending. There are ways some players can stretch out the 3D-ness appeal of releases doing IMAX, 3-D stereoscopic, etc. but even these gimmics will grow old if they haven't already. In the future, there will be some CG films that make money, and others that don't, just like live-action or hand-drawn.

I don't know if the growth has been "rabid" (or did you mean rapid? either way. :)) but we are already in uncharted territory in terms of the number of animated features getting released every year. A decade ago, it was more common to only have 1 animated feature released a year, and now they are coming out from many companies, often just a few weeks apart. I don't think that rate of growth could be sustained (moving to a major CG motion picture every week, for example) but that doesn't mean the industry has to shrink, either.

-jeremy

Shaderhacker
07-13-2005, 04:56 AM
There was a thread about this a while ago, somehow I can't find it... all that's changing is that the "free ride" that some CG features got, where every colorful CG-animated comedy was automatically a hit, that free-ride seems to be ending. There are ways some players can stretch out the 3D-ness appeal of releases doing IMAX, 3-D stereoscopic, etc. but even these gimmics will grow old if they haven't already. In the future, there will be some CG films that make money, and others that don't, just like live-action or hand-drawn.

I don't know if the growth has been "rabid" (or did you mean rapid? either way. :)) but we are already in uncharted territory in terms of the number of animated features getting released every year. A decade ago, it was more common to only have 1 animated feature released a year, and now they are coming out from many companies, often just a few weeks apart. I don't think that rate of growth could be sustained (moving to a major CG motion picture every week, for example) but that doesn't mean the industry has to shrink, either.

-jeremy

Agreed.

-M

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