DreamWorks Animation SKG Inc. said Tuesday its second-quarter net income slipped 6 percent as rising costs and charges offset increased revenue, but said growth should pick up in the second half of the year as the latest "Shrek" DVD hits stores.
For April through June, the movie animation studio said its net income declined to nearly $24 million, or 27 cents per share, from $25.6 million, or 30 cents per share, in the same period last year.
The company reported its cost of revenue rose 33 percent to $98.7 million. Earnings were also hurt by stock options expenses and a charge related to a tax-sharing agreement with a former shareholder. DreamWorks said it spent $2 million marketing its online virtual world, called "Kung Fu Panda World."
Still, results were better than Wall Street was expecting. Analysts surveyed by Thomson Financial had forecast net income of 22 cents per share. Revenue also beat expectations, rising 20 percent to $158.1 million, compared with the $138.7 forecast by analysts.
"Shrek Forever After," the latest in the animated series, generated $51.8 million in revenue, and "How to Train Your Dragon" contributed $33.4 million. DreamWorks did not give specific guidance, but said 2010 results would be weighted toward the second half of the year, helped by the release of those two titles on DVD and Blu-ray in the holiday quarter.
CEO Jeffrey Katzenberg noted that the company once again surpassed $1 billion in worldwide box office sales. He said that with the Brad Pill-Will Ferrell superhero cartoon "Megamind" slated for release Nov. 5, the company is on track to make 2010 DreamWorks' biggest year at the box office.
The company said its board has approved a new $150 million share repurchase program. For the six months ended June 30, DreamWorks has bought back about 3.1 million shares for approximately $111 million.
Shares of DreamWorks closed earlier up 40 cents at $32.08.
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