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Tuesday, Jan 31, 2023

DreamWorks Cuts Earnings Forecasts

DreamWorks Animation SKG Inc. on Monday warned of a loss in the second quarter and cut its full-year forecast due to higher-than-expected returns of its home videos.

The Glendale-based animation company also said the Securities and Exchange Commission has launched a probe into trading of its stock and the release of its first-quarter results in May. Additionally, DreamWorks canceled a planned $500 million secondary offering of stock.

DreamWorks shares fell 13.2 percent to settle at $23.27 on Monday.

DreamWorks said it expects a second-quarter loss in the range of 7 cents a share to 9 cents per share, compared with a previous forecast to break even during the period for the year, it expects a profit 80 cents to 90 cents a share, down from an earlier range of $1 to $1.25 a share.

The average analyst earnings estimate was $1.39 for the full year and 9 cents per share for the second quarter.

DreamWorks adjusted its estimates following a review of current sales and inventory data received from its distributors. The company said it has increased reserves set aside for returned products.

DreamWorks also said it will not proceed with a proposed secondary offering of $500 million of its Class A common stock.

And the company said it is voluntarily complying with a request from the Securities and Exchange Commission concerning the trading of its securities and the disclosure of its financial results on May 10.

Six class-action lawsuits have been filed in recent weeks against DreamWorks Animation, its officers and directors, alleging violations of federal securities laws. DreamWorks said it believes these lawsuits are without merit.


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