Bloomberg News

RealD Slides Below IPO Price After Revenue Misses Estimates

July 29, 2011

(Updates with closing stock price.)

July 29 (Bloomberg) -- RealD Inc., the developer of projection systems for 3-D cinemas, fell below its initial offering price after reporting first-quarter sales that missed analysts’ estimates.

RealD tumbled $2.94, or 16 percent, to $15.48 at 4:01 p.m. in New York Stock Exchange composite trading. That undercuts the $16 a share IPO from July 2010, when the Beverly Hills, California-based company sold 12.5 million shares. The stock is down 40 percent this year.

The shortfall was partly due to people outside the U.S. who reused their 3-D movie glasses, the company said yesterday in a statement. Revenue in the quarter ended June 24 totaled $59.6 million, down from $64.5 million a year earlier and shy of the $78.8 million average of 11 analysts’ estimates.

“We expect to significantly reduce our purchases of new glasses over the next few quarters,” Andrew Skarupa, RealD’s chief financial officer, said yesterday on a conference call. “As a result, we expect our inventory balance to decline during the remainder of the fiscal year.”

Net income fell to $9.4 million, or 17 cents a share, from $9.85 million, or 9 cents, a year earlier, according to the statement. Profit exceeded the 4-cent average estimate of 10 analysts in a Bloomberg survey. The year-earlier net income figure excludes the negative impact of accounting for preferred stock, while the per-share figure includes it.

Jeff Blaeser, an analyst at Morgan Joseph TriArtisan Group, lowered his rating on the stock to “hold” from “buy.”

RealD yesterday also announced an agreement with AMC Entertainment to equip 1,000 additional screens with the company’s three-dimensional projection technology.

Total Screens

As of June 24, the company had deployed about 17,500 RealD- enabled screens, more than double the approximately 7,500 installed a year earlier and up 17 percent, or 2,500, from the previous three months.

U.S. and Canadian screens totaled about 10,300 at the end of the quarter and international screens were approximately 7,200, the company said.

The company predicts installations to increase in the 35 percent to 40 percent range through the year ending next March, Skarupa said on the call. That represents growth of 5,200 to 6,000 screens, he said.

--Editors: Niamh Ring, Romaine Bostick

To contact the reporter on this story: Rob Golum in Los Angeles at rgolum@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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