DreamWorks Swings To Profit, Revenues Misses; Shares Down 8%

(RTTNews) - DreamWorks Animation SKG Inc. (DWA) Tuesday reported a swing to profit in the fourth quarter, helped by lower expenses that offset a decline in revenues. Earnings for the quarter came in line with Wall Street estimates, but revenues fell short of expectations, attributable to the continued poor performance of "Turbo."

Shares of the animation studio fell eight percent in the after-hours, following the news.

Glendale, California-based DreamWorks' reported a fourth-quarter profit of $17.2 million or $0.20 per share, compared to a loss of $82.71 million or $0.98 per share last year. On average, 10 analysts polled by Thomson Reuters expected earnings of $0.33 per share for the quarter. Analysts' estimates typically exclude special items. Fourth-quarter results included an impairment charge of $0.12 per share, related to the performance of "Turbo." The company also recorded an impairment charge of $0.06 per share related to other content, and a gain of $0.05 per share on a sale of an app in development.

Revenues for the fourth quarter dropped to $204.3 million from $264.7 million last year. Nine analysts had a consensus revenue estimate of of $227.07 million for the quarter.

The company had not had any major movie release during the quarter.

Turbo, which was released in July misfired, and not in line with DreamWorks expectations. It only collected about $282.6 million in worldwide box office collections. "Turbo," a film about an ordinary garden snail who becomes the fastest snail in the world, had a production budget of $135 million, but failed to even collect $100 million in US box office collections.

During today's conference call, Chief Executive Jeffrey Katzenberg said, "Our second film of the year, Turbo, faced one of the most competitive feature film environments we have seen. While it performed fairly well during the fourth quarter at the international box office and its home video release, it still fell short of our expectations."

DreamWorks' has had fluctuating results for the past few quarters. Its second quarter results were boosted by a superb run from "The Croods," while the studio had written off $87 million on the poor holiday run of "Rise of the Guardians" in the fourth quarter last year. The company has now placed its bets on its next release "Mr. Peabody & Sherman" in March, followed by the sequel to "How to Train Your Dragon" in June, and "Home" in November.

Turbo contributed feature film revenue of $1.6 million in the quarter, while the Croods contributed feature film revenue of $59.7 million in the quarter, primarily from home entertainment.

Costs of revenues for the quarter dropped to $139.3 million from $354.0 million last year.

DWA closed Tuesday's trading at $35.20, up $0.35 or 1.00%, on the NYSE. The stock, however, dropped $2.75 or 7.81%, in after-hours trade.