Bottom line swings to a $13.7 mil profit at quarter's end
DreamWorks Animation delivered solid earnings Thursday thanks to a strong ancillary performance by “Madagascar.” But it was still a grim day for the toon studio as its flagging stock once again hit an all-time low.Revenue more than doubled from a year ago to $74.9 million, driven by the domestic pay TV and worldwide homevideo perf for “Madagascar.” Bottom line swung to a $13.7 million profit in the quarter ended June 30 from a $3.7 million loss a year ago. Comparison was helped in large part by accounting irregularities in the first quarter of last year for “Shrek 2″ homevideo sales, which resulted in no revenue from that pic. “Madagascar,” which has sold a very solid 18.9 million vid units, contributed $37.9 million of the company’s revenue; $9.6 million came from international pay TV for 2004’s “Shark Tale” and $3.4 million from homevid revenue for last fall’s weak performer “Wallace & Gromit: The Curse of the Were-Rabbit.” Revenue from “Over the Hedge,” which is wrapping up its domestic run and has a few more major markets to play overseas, isn’t expected to come until the fourth quarter, when it hits homevideo. Pic has grossed $152 million in the U.S. and $122 million overseas so far and probably will end up in the low $300 millions worldwide. That’s well below “Madagascar” and both “Shrek” pics and a little worse than “Shark Tale,” making it a relatively weak performer for DreamWorks Animation. Theatrical revenue after Paramount recoups its distribution and marketing costs likely will be minimal, meaning DWA is counting on homevid and other ancillary markets to do well. “Hedge” did bring in $10.7 million last quarter, as Paramount made $4.6 million to cover some operating expenses that used to be handled by DreamWorks Studios, and $6.1 million came from licensing. Company still has $7 million in unrecouped revenue for “Shrek 2,” resulting from underestimates of retail DVD returns last year. But that figure is falling quickly, and DWA could start earning revenue from the hit sequel again by the fourth quarter. Its second pic this year will be “Flushed Away,” a CGI toon it co-produced with “Wallace & Gromit” producers Aardman Studios. November release won’t produce any revenue until next year. Execs were particularly cagey about the prospect of a secondary offering, which can be triggered by Microsoft co-founder Paul Allen, one of the company’s biggest shareholders, at any point between this past June and next December. Prexy Lew Coleman said DWA would not have to disclose Allen’s request until a secondary offering is scheduled, meaning it’s possible he’s already requested it. A planned secondary offering last spring was canceled after the stock plunged following the “Shrek 2″ DVD scandal. Stock has since fallen to new lows, down 3% Thursday to $20.30 before earnings were reported.