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Image Seeks Bigger Financial Profile

6 Oct, 2004 By: Erik Gruenwedel


In an effort to bring to fruition an ambitious 25 percent 2005 fiscal year growth and revenue guidance of $105 million, Image Entertainment recently touted its DVD/CD catalog of more than 2,700 titles to a group of financial investors in San Francisco.

Buoyed in part by strong first-quarter (ended June 30) DVD sales of The Nick & Jessica Variety Hour, Larry the Cable Guy: Git-R-Done, Beef II, Pee-Wee's Playhouse, Letter to the President and the CD The Source Presents Hip Hop Hits Volume 9, among others, Chatsworth, Calif.-based Image posted a net income of $890,000 on revenue of $26.5 million, compared to a net loss of $893,000 on revenue of $15.2 million for the same period last year.

“They were looking for us to tell our story to money managers, fund managers, portfolio managers … looking to get Wall Street to recognize us,” said CFO Jeff Framer about Image's Sept. 21 participation in the ThinkEquity Partners Second Annual Growth Conference. “DVD is so hot, so we [didn't] have to sell that.”

With less than $70 million in market capitalization, Framer said Image's microcap status (less than $300 million in stock value) limits the universe of institutional investors willing to take notice of the company.

“Financial institutions come out hoping to hear an interesting story, financial plan or market concept they haven't heard before so they can track you, follow you and potentially invest in you,” Framer said. “Obviously, if they like you, your stock price will go up, giving you currency for potential acquisitions.”

The company said it distributes 13 percent of the music DVD market, 7 percent of special interest fare and 7 percent of TV DVD.

Framer said Image has no immediate plans for an additional stock offering or refinancing.Image's management, however, does want to substantially increase the 40,000 company shares traded daily — an objective that Framer said is largely attainable through institutional investors.

“For that [trading volume], you need institutions to hold your stock. And for them to own your stock, you have to garner institutional coverage,” he said.

Image recently hired an investor relations firm to help get the word out. “We [are] looking to … get on the radar of portfolio managers who operate within the microcap space,” Framer said. “So when they hear our name they will say, ‘I know those guys.’

Image will report second quarter (ended Sept. 30) earnings Nov. 11.

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