By
Rick Aristotle Munarriz
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July 30, 2008
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Much to DreamWorks Animation's (NYSE: DWA ) delight, Kung Fu Panda is the hit it has been looking for. The movie has raked in $210 million domestically, and another $300 million abroad, to become the company's highest grossing non-sequel release.
The film's strong start helped beef up results in what should have been a lamentable quarter. Oh, the company's second-quarter numbers may not wow you initially. Revenue fell by 37% to $140.8 million. Profits fell to $0.30 a share, compared with last year's $0.60 a share (the company did have a juggernaut last summer in Shrek the Third). Performance is all about exceeding expectations, and Wall Street was looking for a profit of only $0.23 a share on $121.8 million in revenue.
Then again, shareholders have seen this highlight reel before. DreamWorks Animation has now beaten analysts' earnings estimates in each of the past 11 quarters.
Kung Fu Panda led the way, contributing $46.4 million of the quarter's revenue. The film should continue to be an important contributor during this quarter, and then really take off during the fourth quarter after its DVD release come November.
November is also when the company's next film -- Madagascar: Escape 2 Africa -- hits a multiplex near you. This brings us back to the importance of Kung Fu Panda. The company has been on the lookout for a third powerhouse franchise. It can schedule a Shrek and a Madagascar sequel to come out every third year, but it has been looking for that third franchise to give it a slam-dunk sequel every year. It seems to have it here.
Between the success of Kung Fu Panda and Disney's (NYSE: DIS ) Wall-E, computer-rendered animation remains a popular attraction for moviegoers. This typically translates into cash register gold as a film works through the process. Playing at the local Regal (NYSE: RGC ) multiplex and now IMAX (Nasdaq: IMAX ) screens has become the appetizer before licensing opportunities like Activision Blizzard's (Nasdaq: ATVID ) Kung Fu Panda video game, migrating to DVD and Sony's (NYSE: SNE ) Blu-ray format, and a lifetime of royalties from disc sales and cable plays.
DreamWorks Animation knows how to play that game. Wall Street, short again for the 11th time, apparently doesn't.
Here are a few panda games to play:
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