Can DreamWorks Figure Out Animation?

NEW YORK (TheStreet) -- Four years after the last installment of its runaway-hit Shrek franchise, DreamWorks ( DWA) is in need of another animated goldmine. Despite relative critical success, the movie studio's latest kids' flick, Mr. Peabody & Sherman, wasn't it.

In its first quarter ending March, the company recorded a net loss of $42.9 million, or 51 cents a share, compared to profits of $6.1 million, or 7 cents a share, in the year-ago quarter. The results gapped from expectations of a net loss of $13.58 million, or 14 cents a share, according to analysts polled by Bloomberg.

Gross sales for the quarter climbed 9.3% to $147.2 million, higher than analyst estimates of $137.4 million.

A wider-than-expected loss was due to a $57 million impairment charge recorded on the performance of Peabody at theaters globally. The film, based on characters from the 1960s animated TV series Rocky and His Friends, grossed $261 million at the worldwide box office since its release March 7. However, it contributed only $3 million in revenue and remains in an "un-recouped position" with DreamWork's main distributor.

"The box office shortfall of Mr. Peabody & Sherman is evidence of the current challenges we face within our feature film segment, and restoring the strength in our core business is my number one priority today," said CEO Jeffrey Katzenberg in a statement.

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