A certain green ogre has produced a happy summer of 2007 for DreamWorks Animation SKG Inc.
The studio's Second Quarter report showed that the Glendale-based studio posted a $61.8 million net profit over the 3-month time period, ending June 30th. This was a 351% jump from the same time last year, when the studio showed a net profit of only $16.7 million. Nearly half of those profits were generated by Shrek the Third, the latest installment in the studio's successful Shrek franchise.
"Challenged by pirates, Spider-Man, wizards and Transformers, our ogre has more than held his own," a jubilant DreamWorks Animation CEO Jeffrey Katzenberg told analysts in a conference call.
Overall revenue leaped to $222.5 million over the quarter, a vast improvement over last year's $74.9 million over the same time period. Shares also jumped to 60¢ per share, compared to last year's 13¢ per share report.
"The strong financial quarter was driven primarily by the performance of Shrek the Third," continued Katzenberg, "which was the biggest domestic opening for an animated film in the history of the movie industry."
That movie, which starred the voices of Mike Myers, Eddie Murphy, Cameron Diaz and Justin Timberlake, has so far made over $319 million on the silver screen, in domestic receipts alone. That made the CGI flick the second-largest box office giant for the summer of 2007, behind Sony's live-action Spider-Man 3.
Katzenberg announced that a Shrek the Musical will debut on Broadway next year, and that DreamWorks will produce two more sequels to the popular movie franchise. There will also be a Shrek the Halls Christmas special airing on Disney's ABC in December.
The glowing report included a one-time gain of 11¢ per share resulting from a reduction in reserves taken for home video sales, and for marketing costs. DreamWorks Animation said it had lower costs than anticipated due to the transfer of its home video business from Universal Studios (a subsidiary of General Electric Co.) to Paramount Pictures, which is owned by Viacom Inc.
The Second Quarter results also included another one-time gain of 4¢ due to a tax break.
Without that one-time income, earnings were 45¢ per share, which beat the 31¢ per share expected by a group of analysts surveyed by Thomson Financial. Those analysts had been expecting DreamWorks to make $150.8 million in revenue over the quarter.
For the first six months of 2007, DreamWorks Animation reported a net income of $77.2 million, or 75¢ per share. That's in comparison to $26 million, or 25¢ per share, in the same period last year.
This rosy financial picture was in marked difference to the same time period in 2006. Back then, DreamWorks was reeling under an unofficial Securities Exchange Commission investigation, was seeing lower-than-expected profits from the CGI film Over the Hedge (the movie became a modest hit, making $150 million at the box office), and was forced to apply for a $109 million tax write-down due to spiraling costs on the flick Flushed Away.
Katzenberg said that Shrek the Third's profits are likely to continue to produce strong results in the third quarter, when overseas ticket sales are taken into account. It will also spill into DreamWorks' fourth quarter report, when Shrek the Third comes out on DVD.
DreamWorks' earnings have so far justified Katzenberg's strategy of releasing one franchise film, and one original movie, per year. This year's original flick will be Bee Movie, which will feature Jerry Seinfeld as script writer, producer and star. That movie hits theatres November 2nd.
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