DreamWorks Falls Out of the Sky
DreamWorks (NASDAQ:DWA) shares hit their lowest point in years on Wednesday after the company’s fourth-quarter profit took a 72-percent nosedive. Shares tumbled more than 12 percent after Goldman Sachs (NYSE:GS) analysts told investors to sell shares of the Glendale, California-based company.
DreamWorks reported Tuesday that falling DVD sales caused its net income to sink to $24.3 million, or 29 cents a share, from $85.2 million, or 99 cents, a year earlier. The average estimate of 13 analysts polled by Bloomberg was for a profit of 31 cents.
Wedbush Securities analyst Michael Pachter cut his profit estimate on DreamWorks last week based on poor holiday demand for DVDs. Goldman Sachs lowered its earnings estimates on the company Wednesday, citing rising production costs and falling consumer-products revenue.
“The overall home-entertainment environment remains challenging,” DreamWorks CEO Jeffrey Katzenberg said on a conference call. He said DreamWorks hopes to announce new distribution plans for its films by mid-year. DreamWorks’ movie-distribution deal with Viacom’s (NYSE:VIA) Paramount Pictures expires at the end of 2012.
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