RealD Shares -15.5% In Late Trading As Samsung TV Deal Falls Through And Revenues Disappoint

The after-hours trades gave up the 9.5% gain in RealD shares on Wednesday before the market closed. And the strange thing is that earnings for fiscal 2Q were way ahead of forecasts: The 3D movie technology company had net income of $19.2M, up from a $4.2M loss in the period last year, on revenues of $88M, up 34.7%. The earnings, at 33 cents a share, compare to the Street’s forecast of 22 cents. But investors also expected revenues to come in at $94.4M. Fiscal 3Q could be worse: RealD says that only eight 3D films will be out in the quarter vs nine last year, including six that had domestic box office sales of more than $100M. Samsung’s decision not to make LCD screens for RealD’s 3D TV technology could be a big blow to its home entertainment ambitions. CEO Michael Lewis says that RealD now is “pursuing other potential partners.” Samsung “had a recent management change, reviewed all their projects and decided not to go forward with the RealD technology at the moment,” Lewis said. “We’re still bullish on the technology… despite the headwinds we encountered recently.”

RealD isn’t taking sides in the fight between Sony and exhibitors over who should pay for 3D glasses. “We are confident that the industry will reach a resolution” that benefits everyone, Lewis says. Meanwhile he defended RealD’s technology, saying that it offered “twice the brightness of our competitors.” He says that some studios including DreamWorks Animation and Relativity are producing brighter versions of their 3D films. “Higher brightness creates a halo on the entire consumer experience,” Lewis says.  The company noted that 3D accounted for 40% to 60% of the total box office for films offering the option last quarter, and Lewis says that’s “the appropriate expectation.”

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