DreamWorks Animation (DWA) Tuesday evening closed the books on a disappointing 2014. The animated-film maker said it lost $263 million in the fourth quarter, or $3.08 per share. The loss was inflated by layoff charges and film writedowns and brought full-year earnings to a loss of $3.65 per share. 

Penguins of Madagascar lost money for DreamWorks in 2014. Source: DreamWorks.

Worse than expected
Wall Street had been bracing for DreamWorks to take a significant hit from the weak performance of Penguins of Madagascar in theaters. But it turns out that analysts were too optimistic in this case. Wall Street had pegged full-year earnings at a loss of $3.44 per share. DreamWorks' revenue also came in below estimates, rising 15% to $234 million. Analysts had expected a 20% gain instead, to $246 million.

Two of DreamWorks' three film releases failed to reach breakeven in 2014. Penguins of Madagascar joined Mr. Peabody & Sherman as money pits for the company. Only How to Train Your Dragon 2 managed to contribute to profits in the year that just closed. 

The television business also struggled. Revenue from TV fell by 3% in 2014, and profit dove by 71% because of writedowns and extra marketing costs on building demand for new content delivered to partners such as Netflix.

Still, CEO Jeffrey Katzenberg expressed confidence that a new operational structure will put the company in a better long-term position. "Although 2014 was a challenging year ... I am confident that our recent announcement to restructure our feature film business will enable us to deliver great films and better box office results, while improving the overall financial performance of our business," he said in a press release accompanying the results.

Looking ahead to 2018
The restructuring plan calls for DreamWorks to drop its production pace from three films per year down to two. And for the next few years, that schedule will include one sequel and one original film. That should lower the risk to investors of having two theatrical flops in a single year, as we saw in 2014. 

DreamWorks' next several years of releases have already been announced. Kung Fu Panda 3 and Trolls will hit theaters in 2016, followed by Boss Baby and The Croods 2 in 2017, and then How to Train Your Dragon 3 and Larrikins in 2018.

Meanwhile, DreamWorks will release just one movie in 2015, an original concept called Home slated for launch on March 27.

Wall Street isn't showing much patience that this animated film can jump-start a quick rebound for DreamWorks. The stock fell 9% in after-hours trading immediately following the earnings announcement, adding to the 40% drop investors have seen over the past year.