DreamWorks (NASDAQ:DWA) has an expensive habit that's burning through its income statement. In each of the past three years, the animated-film developer has had to take a multimillion-dollar writedown on one of its movie releases. In 2012 it was Rise of the Guardians, which cleaved $87 million out of that year's earnings after disappointing at the box office. Turbo played that part last year, sapping $14 million from profits. And this year we already have Mr. Peabody & Sherman, which caused a $60 million hit to last quarter's results.
In the following video, Fool contributor Demitrios Kalogeropoulos puts those disappointments into perspective, noting that at least DreamWorks' management understands that things can't continue like this for long. The company is aiming to turn things around by focusing on telling more compelling stories, marketing those films better, and then timing their releases better so that they don't get lost in the crowd of entertainment options available every weekend.
Next month's release of How to Train Your Dragon 2 covers those three bases well, Demitrios says, and the movie should do well in the box office. But investors will want to see DreamWorks string together a few more hits before they can have confidence that the company is back on track in its film business.
Demitrios Kalogeropoulos owns shares of Apple and Netflix. The Motley Fool recommends Apple, DreamWorks Animation, Google (A nd C shares), and Netflix and owns shares of Apple, Google (A and C shares), and Netflix. 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. The Motley Fool has a disclosure policy.