Dreamworks (DWA) springs a leak; stock falls 5% before earnings are released

Yesterday (5/10/05), Dreamworks Animation (ticker: DWA) released 1Q05 results that fell far short of analysts estimates, reporting EPS of $0.44 versus the consensus $0.58 estimate  DWA's closed down 5%, even though results weren't released until after the market closed; in after hours trading, DWA shares traded down another 14%.

According to a Newsweek story, CEO Jeffrey Katzenberg warned company insiders that DWA's results would fall far short of analyst estimates.  Katzenberg's briefing took place on Monday, 5/9/05, at 8:00 AM.

On Yahoo!'s Dreamworks message board, "momo_maestro" reported large blocks of DWA stocks on sale for $38.60.  His message was posted at 1:42 PM, three minutes after Newsweek's story was released.

Below is DWA's intra-day chart for 5/10/05.  As shown below, volume significantly increased and DWA's shares fell around 1:30 PM.