DreamWorks Animation tops analysts' profit forecast
The rotund martial arts character played by Jack Black and star of "Kung Fu Panda 2" helped the Glendale animation studio perform better than expected in the third quarter, even though the company’s profit was nearly half what it was a year ago.
DreamWorks on Tuesday reported net income of $19.7 million , or 23 cents per share, in the third quarter, compared with $39.8 million, or 47 cents a share, a year ago. Revenue dropped 15% to $160.8 million.
Analysts polled by Thomson Reuters estimated a profit of 20 cents a share on average, excluding one-time items, on revenue of $159.2 million.
The results were driven by the studio's summer release “Kung Fu Panda 2,” which was the No. 1 animated movie this year, garnering $634 million in worldwide box office revenue and contributing $39.4 million in revenue for the quarter. The picture performed far better overseas than it did in the U.S. and Canada, although it did not do as much business as last year's “Shrek Forever After,” which generated $753 million worldwide.
Company executives attributed the drop in profit to the timing of its releases: “Kung Fu Panda 2” was released in international markets earlier than “Shrek Forever After” so more of its box office was counted in the second quarter. Additionally, DreamWorks opened three movies last year, compared with two planned for this year, including “Puss in Boots,’’ which debuts Friday.
In a conference call with analysts, DreamWorks chief executive Jeffrey Katzenberg said he was hopeful that “Puss in Boots,” a spinoff of the hit "Shrek" films, will exceed $34 million in ticket sales this weekend, and set a new record for a movie opening on Halloween weekend.
Katzenberg called the studio's recent distribution agreement with Netflix -- which will replace its existing agreement with HBO -- a “historic deal for DreamWorks Animation.”
In addition, Katzenberg touted the company's just-announced decision to hire Disney executive Chuck Viane to advise DreamWorks on various distribution options, including releasing its own movies.
DreamWorks relies on Paramount Pictures to distribute its films, but the pact is expected to expire next year.
“This is among the biggest strategic opportunities for DreamWorks Animation and our shareholders," Katzenberg told analysts.
-- Richard Verrier
Photo: Scene from DreamWorks Animation movie "Kung Fu Panda 2." Credit: DreamWorks Animation.