Imax shares tumble as Q2 profit slides
TORONTO (Reuters) - Imax Corp reported a big drop in second-quarter profit on Tuesday as a dearth of blockbuster movies crimped box office revenues at its at its big-screen theaters, knocking its shares sharply lower.
The company picked some "horrible, horrible movies" that failed to lure audiences and it was too quick to stop screening others that performed well, such as car-racing action thriller "Fast Five", said Marla Backer from Hudson Square Research.
Imax's net income fell 87 percent from a year ago, pushing its shares down 15 percent by late afternoon on Thursday. If the historically volatile stock closes at that level it will be the sharpest one-day drop since late 2008.
"The stock is far more volatile than it needs to be because the management talks too many thing that don't matter," said Michael Pachter from Wedbush Securities. "What is more important is to get more screens installed and they seem quite cavalier about their pace of installation."
Imax, which expects to build up its theater network by 30 percent annually and has targeted China, said its global expansion continued apace with strong theater installations.
It said third-quarter box office was off to a strong start, generating $88 million in ticket sales for films such as the new "Transformers" and the final installment in the "Harry Potter" series in less than a month. It made $98 million at the box office in all of the third quarter last year.
Imax installed 41 theater systems in the quarter, compared with 21 a year ago, and upped its full-year forecast slightly to between 120 and 130 theaters.
The Toronto-based company reported net income of $1.8 million, or 3 cents a share, compared with $13.3 million, or 20 cents a share, a year ago.
Adjusted to exclude deferred tax provisions and charges tied to changing values of its stock compensation plan, it earned 7 cents a share. Analysts had expected adjusted earnings of 20 cents a share, according to Thomson Reuters I/B/E/S. Continued...