Earnings, negative comments prompt biggest one-day drop in years
Shares of DreamWorks Animation plunged 12.16% to $17.26 Wednesday, one of the biggest losers on the Nasdaq and the stock’s biggest one-day drop in several years, after dour quarterly earnings and negative comments on Wall Street.
The studio announced Tuesday after market close that profits plunged more than 70% to $24 million from $85 million on lower home video sales, including a disappointing performance of “Kung Fu Panda 2” released in December.
Goldman Sachs lowered its earnings estimates on the Glendale, Calif. company and analysts were concerned at rising costs as well as the softer home entertainment sales, which CEO Jeffrey Katzenberg said reflect “challenges for the industry as whole.”
But DreamWorks only releases two or three films a year and isn’t part of a bigger company, making it particularly vulnerable to fluctuations in key revenue streams. The shares were in the doghouse for much of 2011 and had started a rocky climb this year. Earlier this month it announced a high-profile joint venture to create animated pics in China.