UPDATE, 3:05 PM: The Street doesn’t seem to be buying CEO Michael Lewis’ claim that all’s well with RealD and 3D. RealD shares have lost 47.3% of their value from May 19, when co-founder Joshua Greer resigned as president, to the end of trading on Thursday. The stock will have its lowest closing ever tomorrow if it doesn’t improve from today’s after-hours trading price of around $15.75. Although Lewis says that “the economy’s under duress” causing consumers to second-guess the high 3D ticket prices, RealD will be fine if exhibitors and studios decide to charge less. “Our fees are locked for the term of the contract,” he says. He avoided answering a question about whether 3D tickets will typically account for between 40% and 60% of domestic box office — in June he said he didn’t see a trend when Disney’s Pirates of the Caribbean: On Stranger Tides and DreamWorks Animation’s Kung Fu Panda 2 opened close to that range. Lewis did say, though, that the numbers could improve as theaters have additional 3D screens and releases don’t open “on top of each other.”
PREVIOUS, 1:18 PM: The leading provider of 3D projection technology reported net profits in the June quarter of $9.4M, down 4.6% vs the same period last year, on revenues of $59.6M, down 7.7%. Earnings at 17 cents a share far exceeded the 4 cents that Wall Street analysts expected. But they also thought that RealD would end its fiscal 1Q with $78.9M in revenues.
CEO Michael Lewis told analysts that recent skepticism about 3D is overblown. He says the economics "are compelling" -- about half of the global box office for the second part of Warner Bros' Harry Potter And The Deathly Hallows will come from tickets for 3D showings. "The media and the pundits have focused on films like Harry Potter and used words like 'disaster' and 'disappointing'," Lewis told analysts. "I'll take one of those 'disasters' every weekend." He urged investors not to focus so much on the declining box office share for 3D. "It is the dollars that really matter," Lewis says. AMC Entertainment today agreed to install an additional 1,000 RealD 3D screens. Lewis adds that 3D eventually will become a standard feature in TV sets which means revenues to RealD from consumer electronics products "could be larger than cinema."
Watch on Deadline
Subscribe to Deadline Breaking News Alerts and keep your inbox happy.