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DreamWorks Shares Tumble Over ‘Penguins’

Shares in DreamWorks Animation SKG Inc. fell more than 5 percent on Monday, reflecting the weak box office results for “Penguins of Madagascar ” – which could become the latest bomb for the struggling studio unless ticket sales pick up. The Glendale animation studio’s new movie brought in just $36 million in domestic box office over the five-day Thanksgiving weekend. “Penguins” had been forecast to bring in between $45 million to $48 million. Box officer leader “The Hunger Game: Mockingjay – Part 1” rang up $56.9 million. The results prompted FBR Capital Markets, in Arlington, Va., to downgrade its rating on shares of DreamWorks Animation on Monday to “underperform” from “market perform.” Prior to the release of “Penguins,” Birmingham, Ala. brokerage Sterne Agee Group Inc. forecast the film would total $200 million in domestic box office, a figure that has since been revised downward to $105 million. The firm has rated DreamWorks shares at “underperform.” The weak performance by “Penguins” is the latest misstep by a studio that once brought in guaranteed box office results with its “Shrek” and “Kung Fu Panda” franchises. In the last two years, DreamWorks has taken a $57 million write-down on “Mr. Peabody and Sherman,” released this spring; a $13.5 million write-down on the summer 2013 release “Turbo;” and an $87 million write-down on the holiday 2012 release, “Rise of the Guardians.” Vasily Karasyov, an analyst with Sterne Agee, wrote in a note on Monday that if international box office doesn’t pick up for “Penguins,” that film, too, will require a write-down. “Penguins” needs to bring in a ratio of 3.3 times the revenue in international box office over domestic revenue, a very high bar, the note said. “The highest ratio for a DreamWorks Animation title in the last five years was ‘Kung Fu Panda 2’ at 3.0,” he wrote. The box office results for “Penguins” caps off a tough year for DreamWorks. Its shares have lost 37 percent of their value since January, and twice, potential acquisition deals have fallen apart – the first by Japanese company SoftBank Corp. in September and the second by toymaker Hasbro Inc. in November. Neither deal went through, according to Hollywood insiders, at least partially due to the price demands of co-founder and Chief Executive Jeffrey Katzenberg, who reportedly is demanding $35 a share for the studio. Shares in DreamWorks closed down $1.35, or nearly 6 percent, to $22.49 on the Nasdaq.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.
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