Give Me a Break, IMAX

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You had to go and break my heart again, IMAX (Nasdaq: IMAX). Just when I was getting ready to believe you and don the industrial-sized 3-D rose-tinted glasses, you delay your financial filings. Again.

Shares fell 7% yesterday on that news and put a damper on what had otherwise been a string of encouraging developments in recent weeks:

• The film 300 proved to be a cinematic smash on the company's giant screens and helped Time Warner (NYSE: TWX) score another IMAX-partnered blockbuster.
• The company struck some promising deals with multiplex operators Regal (NYSE: RGC) and Kansas-based Dickinson.
• After shocking investors with no completed system installations during the quarter that ended last September, the company revealed that it will book seven new screens for the quarter that ended in December.

Not bad, just drawn that way
Postponing the SEC filings is more than just a temporary killjoy. It's a sign of incompetence. Look, we know that IMAX has been hit with bad accounting, but the market was starting to look past that problem. Since bottoming out in early December, IMAX shares has risen a heartwarming 62% before yesterday's hosedown.

So what's the hold-up here? Feel free to point fingers. Give those at fault the boot. Incarcerate them, even. But get the numbers right and get them right, right now. Just rip off that darned bandage and start the real healing process.

Of course, reality tells a different story. The company's accounting irregularities run deep, and IMAX is just now starting to realize that a more expansive auditorial review will be necessary. Was the company too naive when critics and a published report in Barron's began calling IMAX out a year ago? Or was it just too proud?

This situation only brings up deeper questions. When IMAX took itself off the bidding block because it thought the offers were coming in too low, was it basing its valuation on its own falsely inflated numbers? More importantly, would any of the bids -- or proposed bids -- have been higher than the equivalent of where the stock is now? They probably were, so isn't it time that we end this little charade and hand over the keys to someone who knows how to drive?

The way to a happy ending
IMAX has way too much potential to squander it away like this. I found the prospects of a buyout especially tantalizing because rumored suitors such as Sony (NYSE: SNE) and private-equity firms have the access to greenbacks to make tomorrow happen.

You need money to move theaters to digital projection systems. You need capital to enter into joint ventures with multiplex operators to retrofit their screens to the more lucrative IMAX platform. IMAX can keep growing at its casual pace, but a bankrolled IMAX could grow up in a hurry.

Right now, IMAX is running low on the two things that it needs the most: cash and credibility. Once the fiscal probing is complete, it would be great to see the company put itself back on the block. Maybe then, a humbled IMAX will finally find the right financial alliance or corporate combination to unlock its potential.

If not, it's really just a matter of time before a serial shareholder activist jumps on board to right this ship and start throwing people overboard. Leisure-related companies have been ideal targets in the past. Just analyze how outside groups were able to effectively overthrow the lackluster regimes at Six Flags (NYSE: SIX) and Blockbuster (NYSE: BBI) over the past two years.  

Given IMAX's status as a Motley Fool Rule Breakers recommendation -- albeit a battered one -- I can't be the only one who sees that this company has settled for less than what it should have been. With home theaters offering increasingly greater competition, IMAX should be "Plan A" for every single multiplex, museum, and family-entertainment center that wants to matter in the future.

So give us the numbers, IMAX. Then, if you don't mind, hand over the keys, too. 

IMAX was recommended two summers ago to Motley Fool Rule Breakers newsletter subscribers. You can read the original recommendation and have access to all of our growth-stock picks with a free trial subscription.

Time Warner is a Stock Advisor pick.

Longtime Fool contributor Rick Munarriz loves to spot great things early. That's why he's been with The Motley Fool since 1995. He does not own shares in any of the companies in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.