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It’s a jungle out there for D’Works

Wall Street not mad about 'Madagascar'

Hollywood may be happy with “Madagascar,” but Wall Street isn’t: Despite meeting industry expectations, the pic’s $61 million bow sent DreamWorks Animation stock tumbling 9% on Monday.

Some investors were also rattled by a front-page Wall Street Journal story explaining how the company missed its predictions for “Shrek 2” DVD sales in the first quarter. Most Wall Streeters had already taken that disappointment into account, though, as DreamWorks Animation stock fell more than 12% in early May, when the news of lower-than-expected sales came out.

That marks two major hits to DreamWorks stock in May. After reaching a high of nearly $42 in December, the stock closed Tuesday at $29. 40, near its opening price of $28 at the company’s IPO last October.

The “Madagascar” opening was in line with those of “Shark Tale” and the original “Shrek,” which would seem to bear out CEO Jeffrey Katzenberg’s statements that the pic was tracking about as well as “Shrek.” Nevertheless, many investors were hoping for a gross closer to that of “Shrek 2,” which bowed at $108 million.

A Sanders Morris Harris note to investors Tuesday said the pic fell below its estimate of $85 million and an average the firm polled from sources last week of $70 million. Stock was also downgraded by Lehman Brothers on Tuesday based on the “Madagascar” opening.

“While certainly not a disaster,” Sanders Morris Harris said, “the results are clearly soft considering that DWA opened the film on a three-day weekend rather than a traditional two-day weekend; opened the film on 4,300 screens; and made the film purposefully short.”

Other analysts seemed less concerned. A Prudential Equity Group note said “Madagascar” met its expectations and that the pic could still gross $200 million domestic — a figure that seems optimistic.

Also of concern to many investors is a planned secondary offering in which major shareholders Paul Allen, Lee Entertainment and GE’s Universal would unload $500 million worth of stock, putting downward pressure on other shareholders.

But with DreamWorks Animation stock trading at $10 less than it was when that news was announced in March, the offering may be delayed.

Offering had been planned to take place soon after the “Madagascar” bow on hopes the pic would boost the company’s share price, but that bet didn’t pay off.

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