Outlook Dims For Dreamworks Animation

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Things aren’t looking the best for Dreamworks right now. Shares of the studio fell 13% yesterday as video sales have fallen and have caused Dreamworks to adjust its guidance.

Dreamworks Animation announced that its shareholders will not proceed with their secondary offering of $500 million of Class A common stock, which was registered with the SEC in March.

Outlook Dims For Dreamworks AnimationAnimation

“With the release of Madagascar, the company has delivered another highly successful film at the box office. To date it has grossed approximately $180 million domestically making it one of the top 10 animated films of all time,” stated Jeffrey Katzenberg, CEO of DreamWorks Animation.

“However, based on the current valuation of our shares, we believe it is in the best interest of all parties, including the company and its current shareholders, to withdraw the offering at this time,” said Katzenberg.

Dreamworks Animation updated its guidance of “no profit” for the second quarter, now anticipating a loss of between seven and nine cents per share.

“After our first quarter earnings announcement in May, the company has been working closely with our distribution partners to conduct an extensive review domestically and in several major international territories to gather more information about the performance of our home video titles, including their sales movement, inventory levels at retail as well as actual and anticipated returns,” said Kris Leslie, DreamWorks Animation’s CFO.

“As part of this review, we have observed changes in the marketplace that appear to have impacted our titles,” added Leslie. “While it is too early to determine if these changes are temporary or permanent, we think it is prudent at this time to adjust our guidance to reflect higher than expected returns as well as revisions to our video forecasts.”

On top of that, Dreamworks has six class action lawsuits filed against it and some of its executives. The suits claim that the company and executives have violated federal securities laws.

Dreamworks says that it believes the suits to be without merit and intends to vigorously defend itself against them. The company is now under an informal investigation by the SEC.

Chris is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.

Outlook Dims For Dreamworks Animation
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