DWA Reported Disappointing 4Q Results, Piper Jaffray Reports

DreamWorks Animation SKG, Inc. (NASDAQ: DWA) reported disappointing 4Q results littered with a number of one-time items, Piper Jaffray reports.

“Revenue and EPS of $276M/$0.99 ($0.47 ex items) was well below our estimates of $351M/$0.96 and consensus of $294M/$0.73,” Piper Jaffray writes. “GAAP EPS results for the quarter included a $0.52 tax benefit related to deferred tax assets. In addition, underperformance by the Kung Fu Panda Virtual World and Shrek The Musical led to impairments of $12M and $8M, respectively.

“Our significant estimate miss was due primarily to the lackluster home video performance of Shrek Forever After, which management spent considerable time explaining (soft DVD market, competition from other animated titles, low tie ratio due to theatrical outperformance in regions with underdeveloped home video markets). Despite the messy quarter, we believe DWA's recent sell-off reflects the sloppy results and captures near term risk. With lowered expectations and Kung Fu Panda looming the risk/return profile appears attractive.”

DreamWorks Animation SKG closed Thursday at $28.10.