Imax shares down 36%
A double dose of unsettling news panicked investors, who bashed Imax Corp. stock in after-hours trading, sending shares down 36% to $6.17. The move, on paper, wiped out $140 million worth of equity in the company.Imax, which put itself up for sale in March, announced Wednesday that it has not been able to attract rich enough suitors for its board of directors’ taste. It also said it is co-operating with “an informal inquiry” from the U.S. Securities and Exchange Commission and the Ontario Securities Commission about its timing of revenue recognition. Imax believes its accounting policy is in accordance with generally accepted accounting principles. The Toronto-based big screen exhibitor had imposed a news blackout on the sale after retaining Allen & Co. and UBS to “explore strategic alternatives,” including a partnership or a possible sale. “While it received significant initial interest from multiple parties, its view is that there are presently no buyers who have indicated a willingness to acquire the company at a valuation sought by the board of directors,” said a company statement. “We are committed to fully exploring all options … including those offers that did not meet the board’s original valuation parameters,” said co-CEOs Rich Gelfond and Brad Wechsler The company posted its second quarter numbers, including a 34% uptick in revenue to $41.4 million and net earnings that more than tripled to $3.5 million from $1.1 million a year ago. For the three months ended June 30 film revenue more than doubled to $12.2 million, theater operations and “other” revenue were essentially flat at $4.1 million and $1.2 million respectively.
* * *Clear Channel Communications, the world’s largest radio broadcaster, said second-quarter profit declined 11% as compensation expenses increased. Net income fell to $197.5 million from $220.7 million a year earlier, the San Antonio-based company said. Sales rose 7.4% to $1.85 billion, exceeding analysts’ estimates. Chief Executive Officer Mark Mays reduced the number of commercials on Clear Channel’s 1,200 stations to win back listeners who were migrating to satellite radio and digital players such as iPods. The strategy produced better ratings, higher advertising rates and a 5.5% jump in radio sales. “The numbers were well ahead of expectations, despite declines in radio industry revenues,” said Stanford Group analyst Fred Moran in Boca Raton, Florida. Cutting back on commercials “has allowed them to dramatically outshine the industry.” The results include $11.2 million in non-cash compensation expense, Clear Channel said. Interest expenses rose 17% to $123.3 million as rates rose on the company’s $7.91 billion in long-term debt. Moran said these non-operating costs aren’t as important as revenue and measures of cash flow. “A few below-the-line items skewed earnings,” he said. – Bloomberg News
Follow @Variety on Twitter for breaking news, reviews and more