That’s what analysts are debating today after last night’s lower-than-expected Q2 earnings report — and disclosure of an SEC investigation — drove shares -14.9% this morning as they hit 52-week lows. Skeptics say DreamWorks Animation is still too uncertain, especially with the additional news of the government probe into the $13.5M writedown in February for Turbo. “This clearly raises uncertainty in a stock that we think already carries higher risk (both strategic and operational),” Morgan Stanley’s Ryan Fiftal says.
The performance of How To Train Your Dragon 2 — which has generated $166M in domestic box office sales since July 28 — reinforced the bear case, even though DWA says the film will be profitable. Dragon 2 ”should have done better than it did given its high quality, sequel status, and extraordinarily clear sailing in its release window,” Cowen and Co’s Doug Creutz says. Sterne Agee’s Vasily Karasyov adds that the softer-than-expected performance makes it “harder to argue that future sequels will offset soft results from original releases.” Making matters worse, he says, is DWA’s disclosure that its next two films — The Penguins Of Madagascar and Home — will each cost about $10M more than originally planned: $135M not including what DWA calls “incentive-based compensation.” That raises the possibility of a writedown, Karasyov says.
CEO Jeffrey Katzenberg said that DWA might reduce its per-film outlays by producing some “on a very different scale altogether, where it’s not incremental changes in the film cost, but the concepts of the movies and the style with which we would make … Read More »
Benedict Cumberbatch and John Malkovich lend their voices to DreamWorks’ animated spin-off The Penguins Of Madagascar, in which secret agent birds Skipper, Kowalski, Rico and Private join forces with chic spy Agent Classified (Cumberbatch) to save the world from Dr. Octavius Brine (Malkovich). Simon Smith (Bee Movie) co-directs with Madagascar series director Eric Darnell from a screenplay by John Aboud and Michael Colton. Pic flies into theaters in 3D on November 26 with the additional voices of Tom McGrath, Chris Miller, Chris Knights, Ken Jeong, Annett Mahendru, and Peter Stormare:
Less than a month before the release of its tentpole sequel How To Train Your Dragon 2, DreamWorks has flipped the dates for its next two films. Madagascar spinoff The Penguins Of Madagascar is moving up from March 27, 2015, to a Thanksgiving week bow of November 26. It’s switching places with Home, the aliens-hiding-on-Earth tale featuring the voices of Jim Parsons, Jennifer Lopez, Steve Martin and Rihanna. The move comes days after DWA CEO Jeffrey Katzenberg’s high-profile day in the Cannes spotlight, when Dragon 2 premiered on the Croisette and he received France’s Commander of the Order Of Arts And Letters honor. The date switch also follows the underperformance of the company’s most recent pic, Mr. Peabody & Sherman, which led to a $57M write-down in Q1. In fact, three of the studio’s past four films have failed to deliver, which Katzenberg blamed on “inconsistent execution” and other factors tied to marketing and scheduling.
Related: Cannes: DreamWorks Animation Celebrates 20 As ‘Dragon 2′ Breathes Fire On The Fest