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Analyst Lowers DreamWorks Animation Fiscal Expectations

25 Apr, 2011 By: Chris Tribbey


Disappointing DVD sales for Megamind and lower overall DVD revenue caused analysts for investment firm William Blair & Co. to lower its first-quarter financial expectations for DreamWorks Animation.

DreamWorks releases its first-quarter results April 26.

“We are lowering our estimates for DreamWorks the first quarter and full year to account for a recent change in DVD revenue recognition, and lower-than-expected DVD unit sales of Megamind and its associated distribution recoup, which will be a drag on gross margin,” analysts for the firm wrote in a note to investors, lowering their estimated first-quarter revenue for the studio from $134 million to $114 million.

A big box office haul is expected (estimated at $190 million in the first four weeks) when the studio releases Kung Fu Panda 2 on May 26, though while there will be an estimated 9,500 3D screens when it’s released, compared with 6,500 when Megamind was released, “we also note that the 2011 summer movie release season is packed with 3D movie releases, which could result in competition for screens and thus a lower-than-average 3D viewing percentage,” analysts wrote.