DreamWorks profit up on "Bee Movie"

By Sue Zeidler

LOS ANGELES (Reuters) - DreamWorks Animation SKG Inc on Tuesday posted better-than-expected results, helped by demand for DVDs for its "Bee Movie" and "Shrek The Third" films, and lifting its shares by 5 percent.

The animated movie studio also got a boost in the first quarter from older releases like "Madagascar," "Flushed Away" and "Wallace & Gromit: The Curse of the Were-Rabbit."

"The difference between our revenue assumption and their actual results was due to upside realized catalog activities from films like 'Wallace & Gromit' and 'Madagascar,"' SMH Capital analyst David Miller said.

DreamWorks reiterated that for the rest of the year, it expects results will primarily be driven by the performance of "Kung Fu Panda," which opens domestically on June 6.

Because distributor Viacom Inc must first recoup upfront marketing and distribution costs, the company expects the majority of the film's revenue to be recognized in the second half of the year.

First-quarter net income rose to $26.1 million, or 28 cents per share, from $15.4 million, or 15 cents per share on a fully diluted basis, for the same period in 2007. Revenue rose to $156.6 million from $93.7 million.

Analysts, on average, had forecast 21 cents a share on projected revenues of $126.9 million.

"Shrek the Third" contributed $48.3 million of revenue in the quarter, primarily from international home entertainment, while "Bee Movie" contributed $48.9 million of revenue, driven by its release this quarter into the U.S. market and additional international box office receipts.