According to a report in The Wall Street Journal, SoftBank's desire to acquire DreamWorks may be headed to the deep freeze. This comes just two days after the entertainment industry got hit with this juicy tidbit that the two parties were in deal talks, sending DreamWorks' stock soaring 26% to close at $28.18 on Monday.
But in after-hours trading, shares of DreamWorks tumbled 7.4% to $26.09 as investors keyed into this Hollywood gossip. The talks were said to still be on as of Saturday. The Journal notes that it wasn't immediately clear why the buyout talks stalled and whether they will be resumed at a later date or if the deal itself will morph into a different arrangement, such as a content partnership.
One Wall Street analyst had told the Journal that SoftBank could be interested in DreamWorks' library of movies and its related franchise for the characters in those movies, such as Shrek. SoftBank's ultimate goal with a DreamWorks deal could be to steer a youthful audience towards its Sprint (S) operation.
At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
TheStreet Ratings team rates DREAMWORKS ANIMATION INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate DREAMWORKS ANIMATION INC (DWA) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
You can view the full analysis from the report here: DWA Ratings Report