DreamWorks Reports Loss after Rise of Guardians Disappoints
Animation studio DreamWorks Animation has reported a fourth-quarter loss as its sole movie released during the period, Rise of the Guardians, failed to make it big in the box office, contributing to a £109mn write-down.
The company posted a loss of $82.7mn(£54mn,€63), or 98 cents per share, compared with a profit of $24.3mn, or 29 cents per share in the previous year. Revenue rose 21 percent to $264.7mn.
The California-based company has also said that it is planning to cut down on its workforce, in a bid to reduce costs. According to multiple media reports, around 350 employees are expected to leave the company this year.
The studio, which made immensely popular movies such as Shrek and Kung Fu Panda had hoped that the Rise of Guardians would help its performance in the fourth quarter, from Thanksgiving, through the Christmas holidays.
"While Rise of the Guardians did not achieve the level of box office success that we have come to expect from a DreamWorks Animation film, we have made several changes to our future slate that we believe will position us well for the next two years," Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation, said in a release.
"We are now looking ahead to our next release - and our first under our new distribution agreement with Twentieth Century Fox - The Croods on March 22, 2013."
The company wrote down $87mn in costs incurred on the movie, along with charges totalling $54mn related to the decision to cancel the release of another movie Me & My Shadow, apart from writeoffs on several other development projects and restricting efforts.
Analysts expect the company to be under pressure for a better performance on its next movie, but suggest that given its track record, DreamWorks will rebound from its weak performance in the coming months.
"They have a history of making successful films, and they've had one flop ... This movie was a bust, but based on their track record, I expect things to get better," Morningstar analyst Michael Corty was quoted by Reuters as saying.
Shares of DreamWorks have dropped about 7 percent in the last three months. They were down about 3 percent in aftermarket trading following the report.
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