DreamWorks Animation profits sink 73%

LOS ANGELES — Without a successful theatrical release to boost earnings, profits at DreamWorks Animation SKG Inc. plunged 73 percent in the first quarter, although results were good enough to beat Wall Street forecasts.

Glendale-based DreamWorks Tuesday reported net income of $12.3 million, or 12 cents per share, in the quarter ended March 31, compared to net income of $45.7 million, or 44 cents per share, in the prior-year period.

Revenue dropped by more than half to $60.1 million compared to $167 million in the same period last year. Half the revenue came from home video sales of its year-old film "Madagascar" with the remainder coming from TV revenue and home video sales of older titles.

Analysts surveyed by Thomson Financial had expected the studio to break even.

The studio releases two animated films each year and relies on its fall release to generate substantial home video revenue in the first quarter.

But last fall's animated offering, the stop-action "Wallace and Gromit: The Curse of the Were-Rabbit," flopped at the box office, despite critical praise. The studio does not expect any profit from the film, which won the Academy Award for best animated picture earlier this year.

Without profit from the film, DreamWorks is forced to rely on the success of its next movie, "Over the Hedge," to save its fiscal year.

"We're sort of a one-wing flyer this year," DreamWorks Animation President Lew Coleman said in an interview.

Revenue from that film won't come until after its new distributor, Paramount Pictures, recoups its distribution and marketing costs. That may not occur until after the film is released in home video later this year, the company said.

"Over the Hedge" is the first film to be released under its deal with Paramount. DreamWorks switched distributors last year from Universal Pictures as part of the deal that saw Paramount acquire the live-action studio DreamWorks SKG Inc.

DreamWorks will release its second film, "Flushed Away," this fall.

DreamWorks shares fell 75 cents, or 2.8 percent, to close at $26 on the New York Stock Exchange, where they have traded in a 52-week range of $22.45 to $38.94. Shares rose 2.7 percent, 70 cents, in after hours trading.