Dreamworks Animation (DWA) has really been struggling after being one of the media darlings via its Shrek franchise. But with poorer DVD sales from "Shrek 2" and slow box office returns from "Madagascar," they really need their next release to be a hit.
In the last year the company has lost almost 30% of its value. And to make matters even worse their October movie "Wallace Gromit: the Curse of the Were-Rabbit" did real poorly at the box office which dragged down it first-quarter earnings even more.
DreamWorks Animation President Lew Coleman, said the company's performance for the entire year is connected to the upcoming animated feature called "Over the Hedge," an animated feature about a mischievous raccoon and his pals, is due out May 19.
The problem he has and Dreamworks is that the much-hyped film "The Da Vinci Code" is opening at the same time, and it is less than a month until Disney/Pixar's much-anticipated release of "Cars." That and the film has received mixed reviews at this time from a number of trade magazines.
Coleman added in a recent earnings call that "It's a good family story with great characters. However, it's a very competitive time to be releasing a film, we will all be watching closely to see how it holds up against the rest of the summer releases."
Entertainment industry analyst Dennis McAlpine said if "Over the Hedge" crashes, "they've got a problem, if it's a hit, they've got a franchise, there isn't much in-between."
The company's stock plunged from $38 last May (and a high of $43 in December 2004) to below $28 this week.
When I read this, I know that I would be very uncomfortable owning this company. They rely on one stream of income that must be a home run every time to make the company profitable. This can't work for any company in the world. Well, actually there is one that can do this in this field: Pixar. They've gotten it right every time. But Dreamworks Animation isn't Pixar and they have a real up and down history when it comes to its offerings.
They have talent here but a lack of a business model that is working.
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