Análisis de Pali Research

1. U.S. Equity Research
Media
Dreamworks Animation (DWA) April 6, 2009
Downgrading to Neutral; Monsters Simply Not Scaring
Up Enough Attendees, Lowering DVD Estimates
Richard Greenfield
212-259-5176
We are increasingly disappointed with the box office performance of Monsters vs.
rgreenfield@palicapital.com
Aliens, both domestically and overseas. While domestic box office could still come
close to our original $186 mm estimate (our new estimate is $174 mm, as shown in
Ari Danes, CFA
Exhibit A), we now expect international box office to fall well short of our original 212-259-2037
estimates (reduced overseas box office to $245 from $297 mm and that could still adanes@palicapital.com
prove aggressive), as our key fear noted during the MvA screening we attended is
coming to fruition - namely limited international appeal due to the US focus of the
DWA: NEUTRAL (was BUY)
film.
Price $22.30
3D is Box Office Driver, Not the Content – Negative for DVD Sales. In the US, Target Price: N/A (Was $30.00)
only 31% of MvA’s opening weekend screens were 3D, yet, those screens
52 Week Range: DWA $17.32 - $32.73
generated 46% of total weekend attendance and 56% of opening box office. While
an optimist might say this validates the 3D film “movement,” we believe the reality is Market Cap. (mm): $2,030
the excitement of 3D drove attendance with consumers largely unexcited by the Avg. Daily Volume (100 day): 1,032,000
basic 2D movie. If we are right, our concern is that the MvA DVD (likely to go on 5-Yr. Est. EPS CAGR: 1%
sale during the summer) will struggle as in-home 3D is not yet a consumer reality.
 We have lowered our worldwide box office estimate by 13%, but our worldwide 2008 2009 2010
FY (Dec)
DVD ultimate assumption by 28% (13.8 mm units to 10.0 mm). Q1 $0.26A $0.48E NA
Q2 $0.29A $0.21E NA
 We also believe it is less likely that Monsters vs. Aliens will spawn a sequel, as Q3 $0.38A $0.17E NA
global appeal has been the driver of DreamWorks’ approach to franchises in the Q4 $0.46A $0.37E NA
past (both Madagascar and Kung Fu Panda significantly outperformed FY $1.38A $1.23E $1.78E
overseas).
P/E NA 18.1x 12.5x
Prior FY NM $1.67E $1.90E
We have made no changes to our estimates for 2010 DWA releases (How to Train
Consensus FY NA $1.48E $1.99E
Your Dragon, Shrek Goes Fourth, and Mastermind), however, the changes to our
Revenues $650 $665 $801
MvA assumptions lead to a substantial reduction in our 2009 EPS estimates, now at
EBITDA $175 $144 $198
$1.23 (was $1.67) versus consensus at $1.48, as well as our 2010 estimates, with
EPS now at $1.78 (was $1.90), versus consensus of $1.99. EV/EBITDA NA 12.4x 8.3x
Source: Pali Research Estimates and
With 2009 and 2010 consensus estimates at risk along with management guidance Company Documents
of EPS growth in 2009 (vs. 2008) appearing harder to attain, and MvA unlikely to
Note: EPS exclude non-recurring items.
become a franchise, we fail to see a positive catalyst on the horizon (if anything,
continued overseas underperformance and weak DVD sales could prove to be
negative catalysts). In turn, we are downgrading DWA to NEUTRAL from BUY
and removing our $30 price target. We are not downgrading to SELL, as we still
Please Read: Important
expect 2010 to see a notable earnings uptick, even with our assumption that one of
disclosures and analyst’s
the three 2010 releases fails (meaning loses money).
certification appear in Appendix

2. Exhibit A: Dreamworks Animation Estimate Changes, 2009E-2013E (in millions, except per share figures)
2009E Est. 2010E Est. 2011E Est. 2012E Est.
New Old Chg. New Old Chg. New Old Chg. New Old Chg.
664.8 720.2 -8% 801.1 814.9 -2% 845.4 849.6 0% 752.6 849.6 -11%
Revenues
% Change 2% 11% 20% 13% 6% 4% -11% 0%
143.6 195.6 -27% 198.1 210.1 -6% 199.0 202.7 -2% 172.3 202.7 -15%
EBITDA
% Change -18% 12% 38% 7% 0% -4% -13% 0%
EPS $1.23 $1.67 -26% $1.78 $1.90 -6% $1.92 $1.97 -3% $1.82 $1.83 -1%
% Change -11% 21% 45% 13% 8% 4% -5% -7%
Avg. '09-'11 Est. Avg. '09-'13 Est.
New Old Chg. New Old Chg.
770.4 794.9 756.7 797.3
Revenues
180.3 202.8 171.3 196.6
EBITDA
. .
$1.64 $1.85 $1.69 $1.81
EPS
Changes in Lifetime Worldwide Home Video Units
Kung Fu Panda Madagascar 2 Monsters Vs Aliens
New 18.0 15.8 10.0
Old 18.0 15.8 13.8
% Change 0% 0% -28%
Estimates Changes for New Releases
Monsters Vs Aliens
New Old % Chg.
Box Office
Domestic $174.1 $185.9 -6%
International $245.5 $297.4 -17%
WW Box Office $419.6 $483.4 -13%
Source: Pali Research estimates.
2 of 5 April 6, 2009

3. Appendix: Important regulatory disclosures on subject companies
Analyst certification
I, Rich Greenfield, in my role as Research Analyst, hereby certify that the views about the companies and their securities discussed in this report
are accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific
recommendations or views in this report.
I, Ari Danes, in my role as Research Analyst, hereby certify that the views about the companies and their securities discussed in this report are
accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific
recommendations or views in this report
Analyst Stock Ratings
Pali Research’s ratings are defined as follows:
BUY – A stock that is expected at initiation to produce a positive total return of 15% or greater over the 12 months following the initial
recommendation. The BUY rating may be maintained following initiation as long as it is deemed appropriate, notwithstanding price fluctuations
that would cause the target to fall outside of the 15% return.
SELL – A stock that is expected at initiation to produce a negative total return of 15% or greater over the next 12 months following the initial
recommendation. The SELL rating may be maintained following initiation as long as it is deemed appropriate, notwithstanding price fluctuations
that would cause the target to fall outside of the 15% return.
NEUTRAL – A stock that is not expected to appreciate or depreciate meaningfully over the next 12 months.
Disclosure of distribution of ratings: Asia
Pali Research must disclose in each research report the percentage of all securities rated by us to which we would assign a ‘Buy’, ‘Neutral’, or
‘Sell’ rating. The said ratings are updated on a quarterly basis. Below is the distribution of Pali Research’s Asian research recommendations (as
at 31 December 2008):
BUY: 58.8% NEUTRAL: 41.2% SELL: 0.0%
Disclosure of distribution of ratings: Europe
Pali Research must disclose in each research report the percentage of all securities rated by us to which we would assign a ‘Buy’, ‘Neutral’, or
‘Sell’ rating. The said ratings are updated on a quarterly basis. Below is the distribution of Pali Research’s European research recommendations
(as at 31 December 2008):
BUY: 17.9% NEUTRAL: 33.3% SELL: 48.7%
Disclosure of distribution of ratings: US
Pali Capital Inc. must disclose in each research report the percentage of all securities rated by the member to which the member would assign a
“buy”, “neutral” or “sell” rating. The said ratings are updated on a quarterly basis. Below is the distribution of Pali’s US research recommendations
(as at 31 December 2008):
BUY: 42% NEUTRAL: 45% SELL: 13%
Stocks in coverage (as of the end of the most recent calendar quarter): 76
3 of 5 April 6, 2009

4. Pali recommendation and target price history
Disclosure Chart for DWA
D re a m Wo rk s A nim a t io n ( D WA ) St o c k P e rf o rm a nc e a nd P a li’ s R a t ings a nd P ric e T a rge t s
$ 40.00
6/ 27/ 08
10/3/07
B
N
PT $35
$ 35.00
1/23/ 09
5/ 2/ 06
B
S
11/6/06 $30
PT $22
$ 30.00 N
4/ 12/07
B
$ 25.00
PT $35
3/12/ 08
B
$ 20.00
PT $32
4/ 6/ 09
N
$ 15.00
B - Buy N - Neutral S - Sell NR - No t Rated - - - - Price Target (P T) N/A - No t A pplicable
Source: Thomson.
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4 of 5 April 6, 2009

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is Authorised and regulated by the Financial Services Authority and has approved this research report for dissemination in the United Kingdom
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Pali Capital Inc. is the US broker-dealer affiliate of Pali International Ltd. The information and opinions in this report were produced and distributed
by Pali Research. Within the last 12 months neither Pali Research nor any of its affiliates have managed or
co-managed a public offering of any securities or owned any shares mentioned in this report.
Within the last 12 months neither Pali Research nor its affiliates have provided investment-banking services to any of the companies mentioned,
nor has it made a market in any of the securities or received compensation from any of the companies mentioned in this report.
Pali International Asia Private Ltd is a subsidiary of Pali International Limited. Pali International Limited is an affiliate of Pali Capital Inc (New
York), which currently makes a market in DWA.
5 of 5 April 6, 2009