GLENDALE, Calif. (AP) _ DreamWorks Animation SKG Inc., creator of animated hits ``Shrek'' and ``Shark Tale,'' on Monday warned of a loss in the second quarter and also cut its full-year forecast, citing disappointing sales of home videos.
The company also said the Securities and Exchange Commission has launched a probe into trading of its stock and the release of its first-quarter results in May. Additionally, DreamWorks canceled a planned $500 million secondary offering of stock.
In premarket activity, DreamWorks shares plunged $3.15, or 11.8 percent, to $23.66. The stock rose as much as 52 percent following its initial public offering at $28 apiece last October, but is now about 16 percent below its debut price.
DreamWorks adjusted its estimates following a review of current sales and inventory data received from its distributors. The company said it has increased reserves set aside for returned products.
``As part of this review, we have observed changes in the marketplace that appear to have impacted our titles,'' DreamWorks Chief Financial Officer Kris Leslie said. ``While it is too early to determine if these changes are temporary or permanent, we think it is prudent at this time to adjust our guidance to reflect higher-than-expected returns, as well as revisions to our video forecasts.''
The company is now expecting a loss of 7 cents to 9 cents per share in the second quarter, compared with earlier views to break even during the period. Annual earnings estimates were lowered to 80 cents to 90 cents per share from a past range of $1 to $1.25 per share.
On average, analysts surveyed by Thomson Financial are looking for quarterly income of 9 cents per share and full-year profit of $1.39 per share.