DreamWorks soars on NYSE

LOS ANGELES — Shares of DreamWorks Animation SKG Inc. soared nearly 38 percent on the first day of trading Thursday as investors anticipated Shrek-size profits from the computer animation film studio.

Shares in DreamWorks' initial public offering were priced at $28 at the start of trading but closed at $38.56 on the New York Stock Exchange.

Analysts touted the company's short-term profit potential while cautioning about long-term risks, including its aggressive plan to release two animated films a year.

Rival Pixar Animation Studios releases one film a year. Until Thursday, Pixar had been the only other publicly traded computer animation firm.

DreamWorks Animation, ticker symbol "DWA," offered 29 million shares to the public — 4 million of which were sold by company executives. The firm will receive $659.8 million after underwriting discounts and commissions.

DreamWorks co-founder Jeffrey Katzenberg and company Chairman Roger Enrico rang the opening bell at the stock exchange to herald the IPO. They were joined by film director Steven Spielberg and David Geffen, who formed DreamWorks SKG 10 years ago with Katzenberg.

"To see this kind of vote of confidence in them from the investment community is really gratifying," company chairman Roger Enrico said.

DreamWorks Animation is a spin-off of the parent company, which will remain privately held and continue to produce live-action films.

The highly anticipated IPO was oversubscribed and the company said it would give its underwriters a 30-day option to purchase up to a 4.35 million additional shares of common stock to cover any over-allotments.

The money will be used to pay debt involving separation from its parent company and to finance the production of future films.

The company's public debut came a week before Pixar releases its sixth film, "The Incredibles," through a distribution deal with The Walt Disney Co.

Katzenberg said there was enough room in the marketplace for both companies.

"We look at them more as a sister company and one that we admire," Katzenberg said. "The degree to which we compete is we would like to enjoy the same success they have."

Shares of Pixar increased 91 cents Thursday to close at $80.73 on the Nasdaq Stock Market.