3-D projection purveyor RealD
So why are realD shares falling like spilt popcorn today, dropping as far as 19%? I guess it's all in the delivery.
Glance at an after-hours RealD chart and you'll see the decline starting during the Q&A section of RealD's earnings call with analysts -- albeit on minuscule volume.
3-D movies aren't setting the world on fire the way they were supposed to. Management spent plenty of time batting away concerns about lackluster 3-D attendance to recent big-ticket features Kung Fu Panda 2 by DreamWorks Animation SKG
A few upcoming near-guaranteed blockbusters should provide some evidence of how much the average moviegoer cares about 3-D pyrotechnics -- if you can't sell the next installments of Harry Potter and Transformers in this format, then you can't sell a space heater to Eskimos.
The consumer-electronics market is another cause for concern. Multidimensional consumer electronics are selling like freezing-cold cakes, and 3-D functionality is not much of a selling point -- if you bought a 3-D-enabled Blu-ray player or TV set, chances are that you liked the product for other reasons and just accepted the 3-D stuff as a bonus you'll never use. RealD hopes that a licensing deal with Samsung will change all that by putting 3-D screens on laptops and desktop computers from Dell
But then you're assuming that consumers want to don special glasses to read their computer screens or maybe even watch movies, and that's not a smart bet. I expect this effort to fail just like 3-D TV sets have -- only faster.
All things considered, RealD shares are pretty much back where they were after last July's IPO. I can think of several better ways to invest in newfangled movie technologies, with huge-screen vendor IMAX
It's a good idea to keep a close eye on RealD, just in case it turns out to have a turnaround story to tell. I don't see any signs of that today, but surprises happen every day. Add RealD to My Watchlist and you'll be sure to catch the early signs of recovery while there's still time to make money from the new trend -- if it ever happens.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. Motley Fool newsletter services have recommended buying shares of Walt Disney, DreamWorks Animation SKG, and IMAX. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.