Wall Street Sours On DreamWorks Animation's Soft Results And Unanswered Questions

CEO Jeffrey Katzenberg will have to deliver a world class sales pitch soon if he wants to overcome investors’ growing sense that 2012 will be an ogre of a year for the producers of Shrek. The animation studio’s stock hit an all time low in late December when it fell to $16.50. Even so, 22.9% of the shares were controlled by short sellers — people who were betting that the price would continue to drop — according to SNL Kagan. That hasn’t happened yet; DreamWorks Animation closed today at $17.58, which is still -39% over the last 12 months. But analysts don’t see a buying opportunity: This week Goldman Sachs analyst Drew Borst downgraded DreamWorks to “sell.”  He’s disappointed by the estimated $150M domestic box office for last year’s Puss In Boots — which he figures attracted 30% fewer ticket buyers than the average for the previous 13 DreamWorks releases. That probably wasn’t a fluke, he says: The company faces “increased competition at the box office in the kid/family genre” as well as from home entertainment options on cable and online streaming services such as Netflix. Barclays Capital’s Anthony DiClemente also cited weakening trends for home video sales last week when he lowered his 2012 profit estimate by 24.3% to $1.03 a share. He figures Kung Fu Panda 2 sold about 43% fewer DVD and Blu-ray discs than he had forecast. The growing amount of time that kids spend with video games  and tablets, “may be impacting demand for DVDs more acutely than previously thought.” (more…)

This article was printed from https://deadline.com/2012/01/wall-street-sours-on-dreamworks-animations-soft-results-and-unanswered-questions-216445/