Nightmare at DreamWorks: quarterly profit down 63%

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DreamWorks Animation SKG

DreamWorks Animation SKG

Second-quarter net income at DreamWorks Animation SKG Inc. fell by a whopping 63 percent, the Glendale, California-based company announced Tuesday.

The studio blamed in part the delayed release of Madagascar 3: Europe’s Most Wanted in several overseas countries, as well as higher distribution costs.

Net income fell to a level below analysts’ expectations. Meanwhile, shares dropped over 8 percent in after-hours trading Tuesday.

Results for the studio were aided by box office revenues from Madagascar 3, which has grossed over $500 million in theaters around the world since it was released June 8. By comparison, Kung Fu Panda 2grossed $600 million a year earlier, although that movie’s revenues were helped by a release two weeks earlier in the quarter.

DWA’s net income in the three months ended June 30 was $12.8 million (15 cents per share), compared with $34.1 million (40 cents per share) last year. Revenue in the second quarter was $162.8 million, down 25 percent from the same period in 2011.

Analysts polled by FactSet, on average, had predicted income of 25 cents per share on revenue of $185 million.

Some of the revenue for Madagascar 3 was recorded after the quarter ended. As well, distributors took a greater cut of ticket sales to pay for film prints and advertising than expected, said studio chief financial officer Lew Coleman.

He also noted that the London Olympics caused the film’s delayed release in such major overseas markets as the United Kingdom, Germany, Austria and New Zealand. Coleman added that markets that had released Madagascar 3, such as Russia and China, have been paying DWA a smaller share of ticket sales than average, which hurt revenue.

Though he blamed timing problems for negatively affecting second-quarter revenue, Coleman predicted that Madagascar 3 would be a “very profitable film.”

DreamWorks Animation shares closed up 2 cents to $19.20 in regular trading. But they fell $1.60 (8.3 percent) to $17.60 after the quarterly report’s release.

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