Thank you for the complement. I often question the wisdom of posting here but besides allowing myself to verbalize my thinking so I can see it it writing and judge if I am thinking clearly I do value highly arguments challenging my thinking. Investing 101 says ALWAYS read, listen to and consider counter arguments to any investment thesis to prevent purely emotional thinking.
Thank you especially for the fresh Press, I will find it right after I finish this post.
When I speak of "perceived greed" my thinking is greed is a very relative term. As the saying goes..."where you stand is dependant on where you sit". Oliver Stone's iconic monologue he wrote for Michael Douglas' Gordon Gecko character has some incredible insight into "greed" and it's relationship to not only it's place in capitalism but the human condition. Greed can be for not only money but many, many other things. Power, territory, resources, food, mates for procreation and, in today's technological speedway, innovation. One could argue that Steve Jobs or Elon Musk are greedy in their quest to out innovate everyone else. Were the early leaders of America greedy in their quest for growing America by their treatment of Native Americans or acquiring Alaska or the Louisiana Purchase? Was Albert Edison greedy in his competition with Nicola Tesla? Is modern agriculture greedy by seeking maximum yields for food through the use of chemical fertilizer and pesticides in farming or hormones and antibiotics in our meat? Is Big Pharma justified in charging outrageous costs for treating or curing horrible diseases? And finally, are politicians greedy in doing anything and everything they can to achieve what they believe is the greater good? I have strong feelings about all I just mentioned but can also see the logic in an opposing arguement.
If IMAX management can succeed in doing what I have been hoping, and betting on, they might very possibly be on the cusp of doing then they have EARNED their rich rewards.
iam and Ritz,
You may very well be right. The reason I participate on this board, beyond being able to verbally crystallize my evolving thinking about my largest holding, is to hear counter arguments to my (still) bullish view. I value and truly appreciate your posts. Thank you for your posting over the years and a few others here that indulge my insatiable need for information and competing views on IMAX. The intelligent and informed bearish arguments I read here, which are sometimes hard to find in the web fueled nonsense, are 90% of the counterweight to my enthusiasm about my IMAX investment (obsession?) as most of the highly compensated, and supposedly informed, analysts are not nearly as bearish on IMAX as you are. Despite my contrary arguments to many of your views many are undeniable. No domestic deals since the Netflix "experiment", decreasing PSA's, encroachment into the space IMAX created by competing PLF's and lastly, but certainly not least, the heavy and continuing selling of insiders of their shares and/or options. That IMAX, along with the whole exhibition industry, is at a nexus in their existence is also undeniable. If you truly believe your bearish views, as I still believe mine (for now) I hope you have taken short positions on IMAX as you are going to kick yourself for not doing so should your views prove prophetic. I still hold my long position because of my counter reasoning and views about your observations as I will kick myself for not sticking with my thesis about IMAX and Cinema and the incredibly slow moving disruption that is increasingly showing itself should my view prove correct. That is what makes markets. Beyond the perceived greed of IMAX insiders I am still extremely impressed in how far they have come since being unable to sell a Brand and aging (but the best) Cinema technology and a business plan
to take both into creating the future of Cinema. Which view will prevail should become clearer in the coming months. We will see.
Perhaps that is when they will rollout the PR for Laser. I have recently commented how critical Laser is for IMAX right now for a multitude of reasons and if they have waited this long why not do it then. They built this headquarters and, I believe, own it rather than do a build to suit lease so I expect it will be very impressive. Perception is reality in much of life but in Hollywood it is everything so the new version of "The Big Deal Theater" from the old headquarters should be a showcase for all the latest and greatest IMAX has to offer with Laser and next generation IMAX sound. They have experience now in building all types of theaters from almost 1,000 seats down to the private system(s?) they supposedly installed so I expect they will do a great job. We will see how it is received.
Yes the insider selling continues and while it bothers me as a long time holder (not trader) this is my view. If IMAX is a sham like some here opine then the continued extensive selling is reprehensible. However, if you take the opposite opinion that IMAX is at the top of the Cinema food chain (and we will soon know if they will continue to dominate and set the bar for the space they created) and set up to take off in their space then it is another story altogether. Extensive, and yes often excessive, stock based compensation in disruptive enterprises is something that became a trend in the 1990's in compensation of key employees especially but also, in fact, all employees. Everyone has a stake in and a big reward from big success. That the top of IMAX rewarded themselves with huge stock based compensation is not in dispute. If, however, IMAX continues to execute and the company thrives along with the stock price then they are just cashing in and deversifying or just spending the proceeds from the company's success. If I share the ability to do that with my investment in IMAX I have no problem with the insider selling. Perhaps we will know in June who is correct.
If you go to the IMAX website they have the video which I suspect you will see a lot more of. While one could take issues with pushing some boundaries, it is extremely well done. I hope this is the beginning of a big marketing push by IMAX at a time when their brand could really take off. So far, IMAX marketing has left a lot to be desired but if this is a harbinger of things to come I am very encouraged.
Yes, now I remember. I guess I didn't pick up on the thesis when you originally brought it up. The importance of Laser being widely well reviewed and embraced by the Cinema loving public can not be overstated for the future of Cinema and, of IMAX. While IMAX is expanding very well internationally in underserverd Cinema markets where IMAX's brand IS Cinema in many places, domestically the market needs to be wowed off their couches and IMAX need to maintain itself as, on average, the best way to see Cinema. While I agree the PLF screens are eating into IMAX's market share they are not, on average, superior to the IMAX experience. The exhibition chains are committed to profits over being the best experience. Some venues compete very effectively with The IMAX Experience, most are still just inferior copies. If the industry truly committed itself to killing IMAX it could but, I believe, they will not make that commitment. In that case, partnering with IMAX as one of a range of offerings (including in house PLFs) will remain the model for most...for now. With all the capital improvement resources going to seating and concessions (where the real profit is) my thesis that is unlikely to change anytime soon. Not that it can't, I just believe it won't. Many here disagree...we will see. Things should become clearer in 2015 and, certainly, by 2016.
I was not aware it was down to zero on 15/70 releases for 2015, if that is true, but I believe the rail system is still there in the 15/70 IMAX theaters. Regardless, that fact does not change my thesis of the PSA being down due to the the lack of 15/70 experience depressing attendance, it reinforces it. IF Laser is as impressive as advertised that should act to reverse that trend. That was my point.
One thing to take into consideration is that some (anyone know the %?) of the IMAX 15/70 installed base has been "hybridized" with the addition of rails and Digital Systems allowing those locations to show, and get the additional BO revenue, of DMR IMAX movies that are not being distributed in the 15/70 film format but rather solely in Digital. This may be for many reasons but the Exhibitors, IMAX and the Studios all had something to gain by this development. Additionally, beyond the exorbitant cost both financial and logistical for all these stakeholders the availability and future of film is a big wild card that had to be dealt with by all of them. The difference of the product (inferior) to the existing 15/70 IMAX customer has to drive down attendance in these largest of venues from historical levels. One could argue the wisdom of the interim compromise, especially as to what it does to the IMAX brand as Image MAXimum, but from a pure business standpoint it was smart....as long as it is an INTERIM solution if these venues convert to Laser. IF, the IMAX Laser is well received the short term dilution of the brand to it's most ardent of followers (of which I am proudly one), will be forgotten (and forgiven) and the brand will live again on the top of the Cinema food chain as the bar for the rest of the industry. One would assume that if IMAX Laser is well received and installed in as timely a manner as is possible that the PSAs will increase noticeably. The PLF's will most surely follow IMAX and it will be game on for the future of Cinema. A lot is riding on Laser, not just for IMAX, but for the entire Exhibition industry and certianly
future of the Cinema Experience. Is IMAX assured in it's still current position at the top of the Cinema food chain, certainly not, but...for now...I am still betting on them. BTW, if I was an insider I would hedge my bet and sell options I may have, especially if more are coming, and diversify my holdings on booked profits...
Rather than give Furious a full 3 week run before The Avengers IMAX has scheduled Russell Crowe's feature Directorial debut. It's a Warner Brother release, IMAX's closest Studio partner so I am sure that might have played a part but I bet Russell Crowe wanted it as well. The trailer look like it could be a hit across all demographics as it hits all the right themes. That it is not a fanboy movie, like American Sniper, is significant and if it does well in IMAX so it opens up a broader range of content competing for IMAX release dates. Great move by Greg Foster. It follows a series of "experiments" in scheduling content not normally associated with IMAX which seems to be succeeding. And yes, one other "experiment" may have been deemed a mistake, which it might very well be, but since it has not yet played itself out the last chapter of that has not yet been written of that story. Really liking where IMAX is sitting right now but it is the movie business so you never know.
And what does that tell you? Despite the list of negatives you listed IMAX share price is holding up. The market is speaking and, for now, I am listening. Disappointed in today's action, I really thought today would be a good day.
Imax represented 7% of “Cinderella’s” gross and premium large formats comprised 8% of the box office results.
That's 13,966 PSA for IMAX which is not bad for a kid oriented movie where IMAX was not doing well in the past. This movie was not animation however, where IMAX had done very poorly, and from the clip I saw was it was probably great in IMAX. A net plus for IMAX as it again broadens the variety of different genres they can draw content from. It also adds to the PLF trend overall, the space which IMAX created. Some may read the PLF success as a negative for IMAX but IMAX was never going to have this space to themselves. Android based phones my out number iPhones but it doesn't seem to be hurting Apple all that much. We will see what the market thinks tomorrow but I would think if the overall market is up IMAX will be up more percentage wise. And if it is down IMAX will still do better than the market. All in all unexpected good news just as IMAX hopefully will be putting up strong numbers with the coming very solid slate that is extremely well spaced for maximum IMAX BO.
I believe the answer to the slowdown in new deals has more to do with Laser, and it's disruption of projection technology, than the Netflix controversy. Think about it. The industry is still paying for technology (film to digital upgrades) that is already outdated that they were forced to adopt by the studios, distributors and the reality of the changing economics of movie exhibition. The promise of Digital was lowering of costs and complexity in an industry with small, inconsistent profit margins on the actual exhibition of movies with the real profit lying in the concession stand in the front of the multiplex. The cost of paying for a projectionist when the theater has only a few customers had to hurt more than the cost of flipping a switch on a digital projector. While then cost of the prints was borne by the studios and distributors it had to ultimately come from ticket sales. The promised consistency of the product and greater problem free uptime than film was certainly desirable. Now, while still amortizing that investment the movie attendance has dropped with the exhibitors experimenting on how to stem or reverse that trend. Upgraded concessions, some delivered to your seat and extremely expensive and complex seating are all costing them in increased overhead and capital investments. Their focus is off the actual presentation just when the disruption I spoke of in the beginning of my post is showing itself. The exhibitors are smart in not worrying about presentation when the future is being revealed over the next few years. Laser, as of now, is expected to be too complex and expensive for the smaller screens that are often the targets for IMAX or PLF conversions (~300 seats) but does anyone doubt that the cost will come down and the complexity decreased in the not too distant future? To your point, the smaller operators have to be even more focused on how they commit themselves in this evolving industry as their room for error is much less.
The house brands, by and large, are mostly a "me too" copy of IMAX. IMAX, from what I hear, take a front seat to the Clones when there are an IMAX and Clone in the same multiplex. For movies showing on all formats in, at least the multiplexs I am plugged into, customers go for IMAX first, the clone second and, interestingly, the 2D version next if it a 3D movie. The chains know IMAX is THE preferred way to see movies that are in IMAX. The chains also generally run their projectors with saving costs in mind first with lower light levels to extend the life the very expensive bulbs and run those bulbs too long so they degrade the image further. IMAX, if you care to believe it, monitors their installations and don't let that happen. The average multiplex employee is not paid very much as well and the projection standards that were fairly high when there were higher paid professional, trained projectionists running the projection have been hijacked by the managers looking to cut costs. The Clones hitting bigger numbers is more a reflection of there being more of them and the publics desire to see movies on the biggest screen available. The trend in Cinema back to bigger screens that IMAX started has proven itself. Can IMAX lose the competition...sure...but so far they are still at the top of the Cinema food chain. Dolby, if they succeed in rolling out their offering, is right now their only competition. We will see where that goes.
The disclosure that IMAX has content lined up for all but one week this year “demonstrates the increasing value of the IMAX format to studios and their desire to lock-in slots well ahead of time (with studios also clearly willing to move release dates),” says B. Riley’s Eric Wold who lifted his IMAX stock price target 11.5% to $43.50.
This analyst used to be very bullish and then turned very bearish and was the most quoted analyst for quite a while. Now he is bullish again with the highest price target I have seen. He turned bearish for reasons many of which I believe turned out to be incorrect. He was correct in the bearish call however. This time I believe he is spot on to IMAX's current advantage...their clout with the Studios, Producers and certainly Directors. Even actors are pushing for IMAX as Tom Cruise did by rescheduling his recent Mission Impossible to get an IMAX slot. He is also a producer so maybe that hat he was wearing was driving that.
As long as this enviable situation remains, they keep executing by installing at current pace or better, they keep executing by signing more deals, they execute by remaining the best widely available way to see big movies and Greg Foster maintains his knack for picking mostly winners I will remain an owner of IMAX stock. I actually think if the overall market is good and the slate of movies drives (mostly) big Box Office I think we hit Mr. Wold's target by the end of the summer or year end with Star Wars. If Star Wars somehow beats Avatar worldwide box office then either IMAX stock really takes off or someone buys them. Extrapolate the numbers with the content known to be hitting over the next 3 - 4 years with Avatar, Star Wars, etc....
I have been waiting for this for a very long time. Is this the moment that many will be looking back on months or years from now that IMAX finally made it's move...it could be. We will see but I am enjoying the ride right now!!
Luck can be where hard work and opportunity meet. Many of us here have put in the hard work and, for now, it looks like IMAX has an incredible opportunity at this particular time in the Cinema space. They just have to continue to execute as they have. I will not predict the future beyond my current feeling that IMAX will be worth more in the coming months, and possibly years, than it is now. Things change but that is my current view and I feel highly confident...for now. And....I will continue to do the hard work but lately it is a lot more fun!
You are obviously bearish on IMAX. I am sure you have your reason for your investment which I expect has you shorting the stock. Good luck with that. You also are here selling your thesis to anyone who reads this board and perhaps to yourself. I am in the opposite position. That is what makes markets. I have found that beyond any investment thesis I have on any company based on research, analysis of the space and my own intuition has to be accompanied by a certain amount of luck. Any investment expert will admit that. Hence I hope. I am not arrogant enough to state my investment thesis as fact as that is the meaning of thesis...it is not fact. All that said, I have a big bet, and big gains, on IMAX that I am sticking with...for now.
They seem to be much more transparent as they have more good news to deliver. Gelfond actually gave an April date for the installation of Laser in the TCL Chinese theater in Hollywood which is arguably IMAX's most visible location. That should be very interesting! Joe actually gave projections for stock based compensation which I had not noticed before. The insight into China was very reassuring and even Russia was mentioned as being surprisingly unaffected by recent events. The opening of their new headquarters in June with an investor day there was a nice surprise. I think I may try to attend that.
Neither. As I said there could be many reasons for no domestic theater signings. A mature, somewhat built out domestic installed base where most of the exclusive zones have been taken. New technology coming that will give pause to anyone committing to an upgrade. I would like a new big screen for my home theater but with all the changes in TV technology I am waiting and making due with my puny 55" Sony Trinitron I bought 4 or 5 years ago.Lastly, exactly the trend you cited...reseating. Very expensive but low tech enough to feel comfortable committing your precious cash to investing in towards the goal of all investment...driving attendance. Most screens have already been upgraded to digital and 3D and they need to get a return on that investment before buying more new technology so why do so if waiting will only get you buying in with technology that is firmly in the new wave that we are just entering? I could be wrong but any or all of these reasons is just as likely of the "hurt feelings" you think are driving the decision making of the exhibitors. I choose to focus more on managements curtailing their excessive selling somewhat rather than the lack of new domestic theater deals.
I respect you for sticking to your guns but you keep beating the drum that the exhibitors are so pissed off at IMAX for the Netflix "experiment" that they are going to punish IMAX. You may be correct that they are still angry but I would not let that effect your investing. I don't think that anyone is not going to business with IMAX because their feeling were hurt. I could be wrong but in business profits generally trump feelings. There are other explanations why there were no domestic deals in Q4 and you should considers the other side of your view.
I wouldn't expect there to be those kind of seats in IMAX theaters anytime soon. Most of the IMAX theaters I have been to already have a very high quality seating. I would expect IMAX to put the money into it's technology and for their JV partners to want that as well. My whole point is that as long as the exhibition industry is investing in expensive seating it leaves less funding for technology acquisition and upgrades. Perhaps that is an entry for Dolby to copy IMAX's business modeling provide the technology through JV agreements. That could be a downside of the reseating trend for IMAX but I think the upside more than compensates any possible downside. In any case all of this will become more clear in 2015 and 2016 as the whole industry is being disrupted and the winners and losers will start showing themselves. For now I am still betting on IMAX to be one of the winners. We will see.