Lions Gate and DreamWorks Under StockCall's Microscope: Movie Studios Churn out Blockbusters

Feb 14, 2013, 08:00 ET from

LONDON, February 14, 2013 /PRNewswire/ --

Movie studios are constantly evolving and the latest trend is towards technologically advanced animation techniques. New advances have greatly increased the cost factor for the studios. While movie production companies like Lions Gate Entertainment Corp. (NYSE: LGF) are raking in good money on the back of their successful franchise and blockbusters, others like DreamWorks Animation SKG Inc. (NASDAQ: DWA) are languishing as they try to curtail their costs. While overall trend in movie production sector is upbeat, there is also excess capacity buildup. In order to reverse such excess, DreamWorks Animation recently announced mass layoffs. StockCall has released full comprehensive research on Lions Gate Entertainment and DreamWorks Animation and these free technical analyses can be downloaded by signing up at

Lions Gate Entertainment Reports Q3 Results

Lions Gate Entertainment is riding the wave with its spate of blockbusters. The company reported strong numbers for its third quarter with revenue standing at $743.6 million, crushing consensus estimates of $719.5 million in revenue. Its EPS also got better at 27 cents per share, while it was expected to report per share earnings of 20 cents. Lions Gate Entertainment capped the overall good results by reporting improvement in its margins as well. Free technical analysis on Lions Gate Entertainment Corp. available by signing up at  

Lions Gate Entertainment is looking to boost its margins as it is expected to grow its fourth quarter EPS to 42 cents per share, but its revenue for the quarter is likely to remain subdued at $701.6 million. In the past couple of quarters, Lions Gate Entertainment capitalized on its blockbusters like Twilight franchise and The Hunger Games.

Going forward, the company would need a new catalyst to drive up its stock price. However, it is not pinning all its hopes to big budget blockbusters. The company is equally invested in smaller low risk productions. It also focuses on TV developments and has had good results through popular shows like Mad Men. The diversification will help the company in avoiding over-reliance on one model. The stock is up 23 percent so far this year and it has come a long way from Carl Icahn's days. The stock offers a good investment opportunity.

DreamWorks Animation Inks New Netflix Deal

DreamWorks Animation is having its share of bad and good news. The company recently inked a deal with Netflix to develop original series for children. On the downside, DreamWorks Animation also announced its layoff plans. The company is looking to eliminate between 250 to 450 positions in order to cut costs. The layoff would reduce DreamWorks Animation's workforce by 20 percent. Register today and access the free research on DreamWorks Animation SKG  

DreamWorks Animation is also finding it difficult to stick to its plans. The company aimed for three films releases a year, but now it announced delaying the release of Mr. Peabody and Sherman. DreamWorks Animation also announced suspending production of 'Me and My Shadow'. With this rescheduling, the studio now has only 'The Croods' and "Turbo' to be released this year. The company also reported that it would need to adjust its operating infrastructure costs due to rescheduling. The stock tumbled following the news.

DreamWorks Animation relies on computer animated films and recent news about rescheduling and layoffs has dented investors' confidence. The studio's financials are also expected to suffer. However, the company garnered Hedge Fund interest as Horizon Kinetics upped its stake in the studio. The stock is expected to remain subdued in 2013 but could pick up in 2014.

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