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  • Q2 EPS of $0.30, versus the analyst estimate of $0.16.
  • Revenue for the quarter was $132 million, versus the consensus of $116.79 million.

DreamWorks Animation (NASDAQ:DWA) reported Tuesday second-quarter earnings that blew past Wall Street forecasts and said cheaper advertising and its bigger film lineup will mean cost savings ahead.

DreamWorks Animation results were propelled by the strength of animated film Kung Fu Panda on pay TV and DVDs and video games, however reports lower second quarter profit, down 7%.

As for the future, the company confirmed producing more movies -- five every two years instead of four previously -- with roughly same number of employees will help it save, by 2011, up to 10 percent per film, which generally cost $150 million or more to produce.

Furthermore, the company also expects to save money marketing its films since the weak economy has led TV networks to drop prices on advertisements.

Jeffrey Katzenberg commented on next year's plans, "We are obviously going to be a very big advertiser with three releases next year."

DreamWorks said its third-quarter results would be driven mainly by the DVD and Blu-ray sales of Monsters and revenue from Madagascar 2 on domestic pay TV.

It also expects $40 million to $60 million in revenue from two TV specials, Monsters vs. Aliens: Mutant Pumpkins from Outer Space, around Halloween, and Merry Madagascar around Christmas, both on NBC.

Beyond Trading maintains its Strong Buy rating on the stock with a potential $34 target.

Disclose: No position on the stock; Dreamworks was recommended to subscribers overweight positions on the long side at $26.5.

Source: DreamWorks Animation: A Dream to Invest In