DreamWorks Animation SKG Inc., the studio led by Jeffrey Katzenberg, reported a fourth-quarter loss after its only new film in the period, “Rise of the Guardians,” failed to connect with moviegoers. The shares fell.
The loss of $82.7 million, or 98 cents a share, compared with net income of $24.3 million, or 29 cents, a year earlier. Sales rose 21 percent to $264.7 million, the Glendale, California-based company said yesterday in a statement, beating the $223.2 million average of nine analysts’ estimates.
The company recorded an expense of $165 million to write down “Guardians” and “Me & My Shadow,” which was pulled from the release schedule. DreamWorks Animation will fire 350 employees this year to reduce costs and position the company to compete with a larger number of family oriented films in the marketplace, Katzenberg and Chief Financial Officer Lewis Coleman said on a conference call.
“We’ve taken this as an opportunity to significantly right-size everything and put it on what will be a better margin and long-term success path going forward,” said Katzenberg, the chief executive officer.
DreamWorks Animation slid 1.8 percent to $16.31 at the close in New York. The shares have lost 1.6 percent this year.
The loss pressures DreamWorks Animation to produce a hit with “The Croods,” opening in theaters March 22. The film, about a prehistoric family, may generate $465 million in worldwide ticket sales in the U.S. and Canada, Lazard Capital Markets analyst Barton Crockett said in a Feb. 24 note.
“A beat would ease concerns about DWA’s creative momentum,” wrote Crockett, who rates the shares neutral. Another disappointment would prompt “greater doubts about DWA’s creative prowess and future movie slate.”
The writedown included $87 million for “Guardians,” $54 million for the delay on “Me & My Shadow” and $20 million for other projects, the company said in the statement.
“Rise of the Guardians,” released on Nov. 21, has taken in $102 million in U.S. and Canadian ticket sales, according to researcher Box Office Mojo. Worldwide sales total $302.3 million. The site lists a production budget of $145 million.
DreamWorks Animation on Feb. 5 pulled “Me and My Shadow” from its release schedule and delayed “Mr. Peabody and Sherman” from November of this year to March 2014.
Competition for family audiences has increased as rival studios produce more live-action movies that appeal to adults and children, Katzenberg said. He cited movies such as Time Warner Inc. and Metro-Goldwyn-Mayer Inc.’s “The Hobbit: An Unexpected Journey” and Walt Disney Co.’s “The Avengers.”