Shares of Imax (IMAX - Get Report) plummeted in late trading Wednesday after the Canadian big-screen purveyor posted a rise in second-quarter earnings, but said it was responding to an informal inquiry from the Securities and Exchange Commission regarding the timing of revenue recognition.
The company also said it couldn't find a buyer and that it identified a material weakness in the internal controls.
For the second quarter, Imax reported earnings of $3.5 million, or 8 cents a share, compared with $1.1 million, or 3 cents a share, a year ago. Revenue increased 34% over a year ago to $41.4 million. Analysts polled by Thomson First Call were looking for income of 7 cents a share and $39.9 million in revenue.
The company, which had put itself up for sale, also indicated that it hasn't been able to find an offer at a price it finds acceptable. "Today the Company reported that while it received significant initial interest from multiple parties, its view is that there are presently no buyers who have indicated a willingness to acquire the Company at a valuation sought by the Board of Directors," Imax said. "Because interest remains from several parties at a lower valuation, however, the Board has authorized the Company's bankers to explore these opportunities. This process is ongoing." Shares sank $3.54, or 37%, to $6.09 after hours.