RealD Earnings: Reversing to a Loss Following Two Consecutive Quarters of Profit

On top of dropping to a loss in the second quarter, RealD Inc. (NYSE:RLD) also came in short of analyst estimates. RealD is a global licensor of 3D technologies for commercial and home theaters.

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RealD Inc. Earnings Cheat Sheet

Results: Reported a loss of $4.2 million (8 cents per diluted share) in the quarter. RealD Inc. had a net income of $18.9 million or 33 cents per share in the year-earlier quarter.

Revenue: Fell 37.5% to $55 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: RealD Inc. fell short of the mean analyst estimate of a loss of 4 cents per share. It beat the average revenue estimate of $47 million.

Quoting Management: “We continued to advance our key growth initiatives during the quarter, although we had a very challenging comparison versus last year’s second quarter that included exceptional contributions from Harry Potter and Transformers,” said Michael V. Lewis, Chairman and Chief Executive Officer of RealD. “We demonstrated our confidence in RealD’s future by repurchasing approximately 2.4 million common shares during the quarter, funded by cash flows from operations.”

Key Stats:

The company’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $3 million in the first quarter, a profit of $5.5 million in the fourth quarter of the last fiscal year and $2.8 million in the third of the last fiscal year.

For two quarters in a row, the company has come in under analyst estimates. In the first quarter, it missed expectations by 8 cents with net income of 7 cents versus a mean estimate of net income of 15 cents per share.

The company’s cost of sales slipped to $37.3 million, a dip of 51.7% from a year ago. Last quarter, cost of sales was 67.9% of revenue versus 51.7% a year earlier.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the third quarter has moved down from a profit of 4 cents a share to a loss of 2 cents over the last ninety days. Over the past ninety days, the average estimate for the fiscal year has fallen from 42 cents per share to a loss of 6 cents.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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