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DreamWorks stock continues to struggle despite profit

News of a unexpectedly large second-quarter profit caused shares of DreamWorks Animation SKG (ticker symbol: DWA) to rise on Friday but only by 1.5% as other questions loomed. The big concern hanging over the company is that although DVD sales and film revenue are expected to remain healthy, there looms the possibility $300million worth of new sales flooding the market this quarter. The Los Angeles Times reports that due to the unusual business structure of DreamWorks, designed to guarantee that the original investors made their money back, top shareholder, Microsoft mogul, Paul Allen can force the company to give a secondary offering. Investors are speculating this may be the case based on the answer that DreamWorks President Lewis Coleman gave in an earnings conference call when asked if Allen had demanded a second offering. “We don’t believe that Paul’s request to trigger requires disclosure,” he said, “I cannot comment.” Analyst Richard Greenfield however warned that there was no legal issue preventing the disclosure of such information. Analyst Anthony Valencia added, “It’s never a good thing when any executive says ‘we don’t think we have to answer you.'”

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