DreamWorks sees net income jump

DreamWorks Animation SKG Inc., citing strong box-office and DVD sales from its sequel “Madagascar: Escape 2 Africa,” said first-quarter net income more than doubled to $62.3 million, or 71 cents a share.

The results, up from $26.1 million, or 28 cents, a year earlier, far exceeded Wall Street predictions and came despite weaker performances in general for Hollywood companies.

Analysts surveyed by Thomson Reuters expected per-share profit of 45 cents.

The Glendale studio’s shares rose 13%, or $2.43, to $21.50 in after-hours trading after closing at $19.07, up 16 cents.


“It was obviously a pretty strong quarter, much better than we expected,” said Drew Crum, a media industry analyst at Stifel, Nicolaus & Co. Crum had forecast net income of 35 cents a share.

The second movie in the “Madagascar” franchise produced more than half the company’s revenue of $263 million in the period. Sales rose 68% from a year earlier.

Since its opening in U.S. theaters in November, the latest “Madagascar” has generated about $595 million in worldwide ticket sales, surpassing the box-office revenue of the original film.

The movie, which was released Feb. 3 on DVD, sold 6.7 million units in the first quarter, making it the second-best-selling DVD title in North America in the quarter, behind Summit Entertainment’s “Twilight,” DreamWorks said.

“Kung Fu Panda,” which was released in June, generated $34.1 million in first-quarter revenue, largely because of DVD sales overseas. The film has sold 14.3 million DVDs.

“We had our strongest first quarter ever,” DreamWorks Animation Chief Executive Jeffrey Katzenberg said during a conference call with analysts.

The studio’s latest film, “Monsters vs. Aliens,” has grossed about $320 million in ticket sales since its release March 27.

Katzenberg acknowledged, however, that the film has not fared well in some key international markets after a strong domestic opening. After grossing $175 million in the U.S. and Canada, the studio’s first 3-D film has garnered $145 million overseas.

“In Germany, France and Italy, it hasn’t delivered the level of performance that we’ve come to expect from our films,” Katzenberg said. “We’re genuinely surprised.”

Katzenberg has been a big proponent of the box-office potential of 3-D films.

Katzenberg said it was too early to tell whether the studio would make a sequel to the film.

He touted the recent success of “The Penguins of Madagascar” TV series, which has become a hit on Nickelodeon.

DreamWorks also disclosed that it bought 2.3 million of its shares in the quarter at a cost of $46 million and that its board authorized future buybacks of up to $150 million.

The company also announced that it had extended Katzenberg’s contract through April 22, 2014, and tied his compensation more closely to the company’s performance. Under the changes, Katzenberg will continue to receive a salary of $1 a year, but next month will receive 1.6 million stock options and 900,000 restricted shares. The stock awards will vest, however, only if the company’s average stock price climbs at least 70% and stays there for any one-year period from May 2009 to May 2012.