DreamWorks Animation’s CFO warns of lower earnings from ‘Shrek’
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The ogre will be generating a lot less green for DreamWorks Animation in the second quarter than a year ago, one of the company’s senior executives warned Thursday.
Lew Coleman, chief financial officer for DreamWorks Animation, said at an investor conference in Chicago on Thursday that the company’s second-quarter earnings per share likely will be ‘meaningfully below’ a year earlier because of the domestic box office performance of ‘Shrek Forever After’ and lower home video sales.
Analysts polled by Bloomberg expected DreamWorks to earn 34 cents a share for the quarter ending June 30, compared to 30 cents a share the company earned during the same period in 2009.
The warning follows a decision this week by Goldman Sachs to downgrade its rating on DreamWorks Animation’s shares to ‘neutral’ from ‘buy.’ Goldman Sachs analyst Ingrid Chung cited the weak performance of ‘Shrek Forever After’ and raised concerns that the studio may have saturated the market by relying too heavily on the franchise. She lowered her estimate for ‘Shrek’ domestic box office sales to $250 million from $325 million.
The fourth installment in the Shrek series has generated $216 million in domestic ticket sales, but has performed well below the level of previous sequels. Overseas, the film has taken in $74 million. Although ‘Shrek Forever After,’ which has an estimated budget of $165 million, is still expected to be profitable, analysts and investors have been disappointed by the results.
That has had an effect on DreamWorks’ share price, which fell about 4% to $27.13 on Thursday. The shares are down 22% since the fourth ‘Shrek’ movie was released on May 21.
‘The company’s recent stock price performance is indication that investors had higher expectations,’' Coleman acknowledged during a William Blair & Co. conference in Chicago.
-- Richard Verrier