Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of animated-movie maker DreamWorks Animation
So what: The creator of animated hits like Shrek, Kung Fu Panda, and Madagascar saw its results dive from a year ago as revenue dropped 21% year over year and earnings per share fell more than 70%. Revenue of $219 million topped analysts' estimates, but costs were higher than expected and the $0.29 in profit per share was short of the $0.32 that Wall Street was looking for.
Now what: The results for the year ahead are expected to be driven largely by the summer release of Madagascar 3, while the upcoming quarter will lean on international box office and home video income from Puss In Boots.
It's practically a natural law that when a company's results miss analysts' expectations, shares will suffer a terrible fate. Foolish investors know that this often doesn't make sense. However, for a lumpy, hits-based business like DreamWorks, it makes even less sense than with other companies. The nature of DreamWorks' business means that it's imperative to judge it on at least an annual basis. Investors that are freaking out about today's bottom-line miss may want to consider whether they're ideally suited for investing in the movie business.
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