Is the industry ogre and out?

HOLLYWOOD Can CGI keep drawing a rosy financial picture?

So far Pixar hasn’t had any flops. DreamWorks’ two “Shrek” pics and even the poorly reviewed “Shark Tales” have generated boffo B.O.

And, as evidenced by the powerhouse debut on the New York Stock Exchange by DreamWorks Animation last week, investors apparently see no downside in CGI-animated pics — at least not yet.

Underwriters upped the offering price on the DreamWorks toon IPO from a predicted $23-$25 to $28 on Oct. 27. Then on their first day of trading, shares shot up 38%, closing at a point that put the company’s value at more than $4.1 billion — nearly as much as Pixar’s $4.5 billion market cap.

But most observers in the animation biz say CGI will inevitably hit a bump in the brightly colored road.

While DreamWorks has had three straight CGI hits, it also greenlighted traditionally animated miss “Sinbad: Legend of the Seven Seas” and modest performers “Spirit: Stallion of the Cimarron” and “The Road to El Dorado.”

Pixar’s remarkable track record to date is seen primarily as a result of a supportive creative environment that has kept key directors John Lasseter and Andrew Stanton inhouse and attracts top talent like “Incredibles” helmer Brad Bird.

DreamWorks operates more like a traditional Hollywood studio, however. “Shrek” and “Shrek 2″ co-director Andrew Adamson has moved onto Disney’s “The Chronicles of Narnia” and some of its animators are being poached by other studios jumping into CGI.

Some on Wall Street say CGI mania is starting to look like the dot-com era, when investors focused more on where a company operated than on what it was actually making.

“I think an equal enterprise value given the impeccable track record of Pixar vs. a more spotty record for Dreamworks is not deserved,” comments Fulcrum Global Partners media analyst Richard Greenfield.

DreamWorks execs insist they can weather a flop and that 2004 has proven they can deliver two hit CGI pics per year, which is the company’s plan for future releases.

“We’re going to do two movies per year plus direct-to-video and will have additional value from our library,” observes chairman Roger Enrico. “We know nothing stays at a 1.000 batting average and we think our model with two films per year helps in that situation.”

With numerous competitors including Disney, Sony and Fox all set to launch their own computer-animated pics, it’s only a question of time before CGI comes down to Earth at the box office.

The question is whether investors are ready for it, or whether there’s another tech bubble waiting to burst.

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