Genius Posts Second Quarter Loss in Wake of Restructuring11 Aug, 2008 By: Erik Gruenwedel
Costs associated with a 15% work force reduction and related restructuring contributed to Genius Products LLC posting a net loss of $11.7 million for the second quarter ended June 30.
The company recorded net income of $2.1 million during the same period of the previous year.
The Santa Monica, Calif.-based distributor said a 49% drop in box office revenue for The Weinstein Co. releases The Great Debaters, Diary of the Dead and Cassandra's Dream resulted in DVD net revenue of $74.6 million, down 33.8% compared to the same quarter the year before.
Genius distributed DVDs of Weinstein Co. theatrical releases Hannibal Rising, Black Christmas, Arthur and the Invisibles, Bobby and Miss Potter during last year's second quarter. Genius is 70% owned by The Weinstein Co. and distributes their DVDs.
Returns topped 32%, compared to 25% last year, which CEO Trevor Drinkwater attributed to an “uneven mix” of titles.
Investors have questioned Genius' business plan and debt, and the distributor's stock price has been hovering around 30 cents per share for much of the year.
In the quarterly call, Drinkwater said The Weinstein Co. continued to be supportive of the distributor's “liquidity” challenges.
“Although we are not fully out of the woods, we are making strides towards that end,” Drinkwater said. “We view 2008 as a year of rebuilding, realigning and repositioning our company for profitable growth.“
He said restructuring would allow Genius to focus on its core brands, which, in addition to Weinstein Co. titles, include World Wrestling Entertainment, Sesame Workshop, Animal Planet, ESPN and Discovery Kids, among others.
Drinkwater said the second half of the year typically produces bigger DVD sales, which in turn would give Genius access to increased credit.
“We believe our streamlined new organization will generate solid top-line results with a much a much-reduced cost structure and release slate,” he said.