Shrek 2 DVDs subject of lawsuit

Shareholders sue DreamWorks alleging misleading projections

Carl DiOrio -- Video Business, 6/2/2005

JUNE 2 | A proposed class-action lawsuit, filed in federal court in Los Angeles today, seeks unspecified damages from DreamWorks Animation for allegedly misleading stockholders about prospects for sales of Shrek 2 DVDs.

The suit follows the recent high-profile miscue by studio execs regarding projections for disc sales of the animated sequel, which hit stores in late 2004. DreamWorks had said in a January filing that the title had sold 37 million units worldwide, but by March, the studio said the number actually was 33.7 million.

Analysts believe DreamWorks underestimated how many units might be returned unsold by retailers. But the shareholder suit suggests the studio's actions amounted to "materially false and misleading statements."

"We believe the suit is completely without merit," DreamWorks spokesman Bob Feldman said.

The suit was filed by New York law firm Abbey Gardy. In seeking damages, its filing notes DreamWorks shares fell $4.45, or 12%, to $32.05 following the reporting of disappointing first-earnings.

News of the legal action circulated during late session marketing trading, with DreamWorks shares closing down 35¢, or 1%, at $29.75 on the day.

« Back | Print