DreamWorks profit beats Street, talks up 3D

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DreamWorks Animation SKG Inc posted a stronger-than-expected quarterly profit and is preparing to unleash "How to Train Your Dragon" on audiences next month, as competition between 3-D movies heats up.

Chief Executive Jeffrey Katzenberg, a champion of 3-D movies, also said televisions with 3-D technology will create a market for his content by 2011, earlier than expected.

On the theater front, when the animated DreamWorks movie "How To Train Your Dragon" opens on March 26 it will face competition for 3-D screens from "Alice In Wonderland," "Clash of the Titans" and "Avatar."

Analysts have expressed concern that "Dragon" could be crowded out by other 3-D movies, hurting revenue.

But Katzenberg said he expects "Dragon" to command more US and Canadian 3-D screens than the 2,100 his company's 2009 hit "Monsters vs. Aliens" played on.

"We will have more than enough screens and more than enough seats to accommodate our audience in 3-D," Katzenberg said on a conference call. "2010 could be the biggest year ever for the company."

JAM FREE 3-D
By the time "Shrek Forever After" hits theaters on May 21, Katzenberg said he expects theaters to have converted enough screens to 3-D to handle all film releases.

"We have experienced what would seem to be probably the only real 3-D traffic jam in the marketplace, here in the spring," Katzenberg said.

DreamWorks also has the 3-D movie "MegaMind" slated for theatrical release later this year.

But its shares, which have risen nearly 50 percent since June, lost ground on Tuesday as investors cashed in recent gains.

"The stock maybe had gotten ahead of itself, like many stocks have over the past year. I don't see any red flags or any minefields in the report," said Rick Munarriz, senior analyst at investing website Motley Fool.

DreamWorks fourth-quarter results beat expectations, thanks to a strong performance from its television specials and DVD sales, including for "Monsters vs. Aliens."

DreamWorks posted net income of USD 43.6 million, or 50 cents per share, compared with USD 51.6 million, or 58 cents per share, a year earlier.

Analysts, on average, expected earnings of 37 cents a share, according to Reuters Estimates I/B/E/S.

Revenue slipped 2.8% to USD 194.2 million from USD 199.8 million.

Katzenberg said an "outstanding" range of 3-D equipped televisions are coming out, and that DreamWorks could begin seeing revenue from that market within 12 to 18 months.

"The rollout of the 3-D home platform is accelerated way beyond anything we thought would happen," Katzenberg told Reuters in a phone interview.

Shares of DreamWorks fell 1.6% in after-hours trading to USD 40.77, off a regular-session close of USD 41.42.