The DreamWorks Animation (NASDAQ:DWA) story is following a predictable narrative. After four of its last six movies took losses, the company is being forced to make drastic changes in an effort to get profitable again.
To do so, the company announced on Jan. 22 a restructuring plan that includes downsizing its workforce by nearly 20%, selling some property, making top management changes, and decreasing the number of movies it produces each year. That restructuring process is now fully under way, with the recent sale of the company's headquarters in Glendale, California.
At a time when Walt Disney (NYSE:DIS) is increasing its movie production and benefiting from rising studio entertainment segment profits year over year, DreamWorks is scaling down and, in 2015, will actually make just one movie. It's not all bad news for DreamWorks, though, and the company still has some positives going forward to pull operations back around. With the restructuring under way, the company is on track to save $30 million in 2015, and $60 million by 2017 thanks to these changes. With the stock near a two-year low, is now the time to get in for what could be a resurgence in the coming years following this restructuring?
DreamWorks is well known for its successes with quirky films like "Shrek" and "Kung Fu Panda," films that made the company a disruptive force in the animation business thanks to humor appreciated by both young and adult audiences. "How to Train Your Dragon 2," released in May 2014, did very well for the company, earning $619 million at theaters worldwide and winning an Oscar nomination for best animated feature.