Imax, RealD earnings disappoint, stocks plummet
Wall Street has gotten just as unhappy with pricey 3-D movies as most Americans.
Shares in digital and big screen movie company Imax and 3-D cinema firm RealD plummeted on Thursday following earnings reports that disappointed investors. Imax stock dropped 17%, while RealD stock was down 15% in after-hours trading.
Both companies fell short of analysts' revenue expectations, with Imax missing on net income as well.
The news comes as returns from 3-D screens in the U.S. and Canada for many movies this summer have been unimpressive, including “Harry Potter and the Deathly Hallows -- Part 2,” “Captain America: The First Avenger” and “Green Lantern.” Overseas, however, people remain more interested in paying extra to see images pop out of the screen.
Canada-based Imax, which plays many but not all of its films in 3-D, reported that movie performance in the quarter ended June 30 was disappointing. “Looking back over the last six months, it appears that there were fewer blockbuster titles that are consistent with our brand than in the same period last year,” chief executive Richard Gelfond said in a statement.
Films released on Imax screens in the first half of the year include “Mars Needs Moms,” “Sucker Punch” and “Pirates of the Caribbean: On Stranger Tides.”
Imax's net income for the quarter was $1.8 million, down 87% from a year ago, while its revenue of $57.2 million was up 3%.
Despite the weak financial news, Imax noted that it signed contracts for 153 new theater systems in the first half of the year, up from 98 in the same period in 2010. International growth is a primary focus, with new theaters opened in Brazil, Italy, and Spain, along with a new foreign operation in China. “We believe we are in the early innings of our global expansion,” Gelfond said.
Meanwhile, Los Angeles-based RealD's $59.6 million in revenue dropped 8%, in contrast to analysts' expectations that it would grow. In investors' minds, that outweighed a 226% increase in net income to $9.6 million that beat analysts' estimates.
As of June 24, the company had 17,500 screens that used it 3-D technology, 10,300 of which were in the U.S. and Canada and 7,200 overseas. Nonetheless 58% of its net licensing revenue came from international markets, underscoring the imbalance in 3-D interest between domestic and foreign audiences.
RealD shares closed up 3% at $18.42 Thursday before the disappointing financial results were released. Imax shares closed at $20.21.
Bad news for the latter company came just three days after its stock dropped 13% on Monday following a downgrade by a prominent analyst.
-- Ben Fritz