Genius Ups Revenue and Loss12 May, 2008 By: Erik Gruenwedel
The decision to accelerate its exit from non-branded DVD titles and related partners coupled with ongoing restructuring resulted in Genius Products Inc. May 12 reporting a first quarter (ended March 31) loss of $15.4 million, compared to a loss of $2.4 million during the prior year period.
The restructuring, which resulted in a previously disclosed 15% reduction in the Genius workforce, caused the Santa Monica, Calif.-based distributor to withdraw previous fiscal year guidance for revenue, pre-tax earnings and free cash flow until the next financial call in August.
The company expects annual savings due to restructuring to total $4.4 million.
Genius, which is 70% owned by The Weinstein Co., reported a revenue increase of 18%, to $98.2 million, from $83.1 million last year.
Principle revenue drivers included Weinstein DVD releases of The Mist, The Hunting Party, 1408 and Rob Zombie's Halloween.
A notable underachiever was Superhero Movie, which CEO Trevor Drinkwater said did less than “what we thought.”
The distributor said it would focus on branded content from TWC, RHI Entertainment, WWE, ESPN, Sesame Workshop, Entertainment Rights, Discover and IFC. It also said it is relying on about 10-to-15 Weinstein theatrical titles for DVD release by the third and fourth quarters. TWC released about 18-to-20 titles last year.
Genius also plans to expand its video game retail presence with the summer release of a game title based on the popular online Line Rider brand followed by an interactive board game from the Halo franchise.
“We believe these actions will improve our margins,” Drinkwater said in a call with investors.
Separately, Genius announced the resignation of EVP and CFO John Mueller. Edward Byrnes, a 30-year Warner Bros. veteran, assumed Mueller's positions.
The CEO admitted shoring up Genius' lagging stock price was both a priority and embarrassment. He said initiating an oft-mentioned reverse stock split would not be done to get on NASDAQ but rather to clean up the company's capital structure and attract investors.
Genius stock dropped 1 cent in midday trading to 42 cents per share.
“2008 will be a year of rebuilding, realigning and repositioning our company,” Drinkwater said.