AMC: The Sequel

Let's see if the projectionist can screen this right the second time. AMC Theaters is filing to go public as Marquee Holdings again. The giant multiplex operator pulled its springtime IPO after watching rival Cinemark Holdings (NYSE: CNK  ) tank after beating it to the opening bell.

The chains were rushing to go public, hoping to cash in on investor excitement over a slate of summer theatrical releases that was brimming with potential blockbusters and eagerly anticipated sequels.

The industry got its wish. It has been a strong season at the multiplex. But the market's appetite for the exhibitors themselves has yet to be exhibited. Cinemark is still trading below its $19 IPO price. Failing to live up to the hype, Carmike Cinemas (Nasdaq: CKEC  ) and market leader Regal (NYSE: RGC  ) are trading well below their springtime highs. Even digital ad specialist National CineMedia (Nasdaq: NCMI  ) , a high-growth cinema play when it comes to in-theater marketing, is trading 18% off its June peak.

AMC's timing isn't necessarily better as it attempts to tap the equity market again. But the hot summer season should reflect kindly on the company's near-term performance. It posted a welcome profit in its first fiscal quarter of 2008, which ended in June, but did so on a 4% dip in total revenues. It's hard to consider this a growth industry -- the company closed more theaters than it opened during the quarter. It now watches over 377 theaters housing 5,300 screens, all but 13% of them in the United States.

Skeptical investors may wonder if the profits will keep coming now that Peter Parker, Princess Fiona, Harry Potter, and Captain Jack Sparrow are fading to black. AMC won't wow audiences with its past -- it's coming to market with $1.9 billion in debt and an unenviable streak of posting operating losses in each of the past nine years.

This doesn't necessarily mean that the future is bleak for AMC and its peers. The spirit of innovation is hungry. Chains are teaming up with IMAX (Nasdaq: IMAX  ) to transform ordinary screens into higher-grossing bigger-screen experiences. The move to digital projection systems -- fueled by companies like Thomson (NYSE: TMS  ) and AccessIT (Nasdaq: AIXD  ) -- will give exhibitors greater programming flexibility in the future, saving studios on costly prints.

Still, there's little reason to get excited about AMC. That may ultimately lead to another abandoned filing unless a humbler Marquee Holdings is willing to settle for less. Big screens, little expectations? So much for a Hollywood ending.

Here's a triplex of trailers to learn more about AMC's botched IPO earlier this year:

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 536734, ~/Articles/ArticleHandler.aspx, 2/26/2015 6:19:34 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!