Tags: DreamWorks | Animation | digital | DWA

DreamWorks Animation a Digital Mainstay

By    |   Wednesday, 30 Nov 2011 05:51 PM

DreamWorks Animation SKG (DWA) has become a mainstay in the hot digital cartoon movie category. The studio was created by the merger of Pacific Data Images and the feature animation division of DreamWorks, the famed company founded by Steven Spielberg, Jeffrey Katzenberg, and David Geffen.

The four Shrek movies constitute the company’s flagship franchise. They grossed about $3 billion globally at the box office and sold more than 110 million DVDs, generating another $1.5 billion of revenue.

The recent success of Shrek spinoff Puss in Boots has boosted DreamWorks shares. The movie pulled in $67.1 million of box offices sales in its first two weeks of release. The company is creating films at a faster pace than the past, which should help to smooth and increase its earnings.

Nevertheless, DreamWorks’ profit plunged more than 50 percent in the third quarter, to $19.7 million from $39.8 million a year earlier. Revenue sank 15 percent to $160.8 million. Remember, though, that quarterly earnings mean less to DreamWorks than most companies, due to the uneven nature of its film output and revenue flow.

Bullish view

Standard & Poor’s analyst Tuna Amobi has a five-star buy rating on DreamWorks shares. “Despite somewhat mixed results for the first nine months of 2011, we believe DWA remains well positioned to further capitalize on its 3D film strategy, as worldwide screen deployment continues to ramp up,” he writes.

“The studio's focus on family-oriented fare should also help provide a buffer against potential volatility in the home video market . . . We remain cautiously optimistic on the upcoming film slate, as DWA gears production for its first-ever three film release year in 2013.”

Amobi predicts DreamWorks’ revenue will rise 9.5 percent in 2012, boosted by contributions from Kung Fu Panda 2, How To Train Your Dragon, Megamind, Puss In Boots, and Madagascar 3.

The company next reports Jan. 25.

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DreamWorks Animation SKG (DWA) has become a mainstay in the hot digital cartoon movie category. The studio was created by the merger of Pacific Data Images and the feature animation division of DreamWorks, the famed company founded by Steven Spielberg, Jeffrey Katzenberg,...
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Wednesday, 30 Nov 2011 05:51 PM
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