RealD shares up on 2Q; plans to grow beyond films

The Associated Press
November 13, 2013

RealD Inc. shares soared Wednesday after the 3-D technology company announced plans to expand into new markets beyond the movies and cut jobs and costs.

The company, based in Los Angeles, creates and licenses 3-D movie technology used in theaters around the world. Its sales have slumped in recent years as 3-D ticket sales faltered.

It also reported better-than-expected results for its fiscal second quarter, which ran from July through September, and said the film "Gravity" has done well in the current quarter. RealD also said late on Tuesday that it has won new contracts in China and Russia, fast-growing cinema markets that RealD said could help its business.

RealD said Tuesday that it has begun cutting costs, including slashing 20 percent of its workforce, which it expects to save $15 million annually. The changes began this month and are expected to be complete by the beginning of its 2015 fiscal year, which begins in April.

The company said in a conference call with investors that it has technology that it plans to roll out in 2014, which it thinks it can use in both the cinema and consumer electronics markets. The company declined to provide further details on the new products but believes this could provide a new source of growth in the long run.

Stifel analyst Benjamin Mogil applauded the company for taking some difficult steps but maintained a "Hold" rating on the stock because he doesn't believe the company's revenue prospects have changed for fiscal 2015.

RealD on Tuesday posted a loss of $4.7 million, or 9 cents per share, for its fiscal second quarter. This is compared with a loss of $4.2 million, or 8 cents per share, in the same quarter last year. Its revenue fell 20 percent, to $43.9 million from $55 million.

Analysts polled by FactSet had predicted a loss of 19 cents per share on revenue of $42.5 million.

Shares of the company rose 21 percent to $8.49 in afternoon trading Wednesday. The stock had dropped 38 percent this year.