NWS)) "Avatar" are the best candidates for the medium's immersive experience. IMAX often helps kick earnings into overdrive. The explosion of the theaters are a death knell for traditional film cameras. Companies like Eastman Kodak ( EK), which supply the film for traditional film cameras, have been slow to adapt to changes in the market as the industry has shifted toward digital media. Currently, IMAX cameras use Kodak film, though the company is set to introduce a digital 3D IMAX camera this year, which should cut down on production costs and make filming in IMAX more efficient, leading to even higher profitability. For Kodak, it's lights out. For IMAX, the company's theaters are equipped with state-of-the-art sound and visual technologies that have the sole focus of maximizing the experience for the customer. The company, which had struggled to produce profits, is on an upward trajectory, generating record sales in the fourth quarter and using its cash reserves to wipe $74 million in debt off the books. The company still has about $20 million in cash and now has a positive equity position. IMAX has deals with Walt Disney ( DIS), Fox, Warner Bros. (a division of Time Warner ( TWX)), Sony ( SNE), Paramount (a unit of Viacom ( VIA)) and DreamWorks ( DWA). Now that home televisions are headed down the path of 3D, it's hard to imagine that 3D won't be the norm in a few years.
Innovation is key for growth, and innovation is in no short supply at IMAX. While the stock may still carry a fair amount of risk, consider IMAX as a solid speculative bet on the future of entertainment. -- Reported by David MacDougall in Boston.