The small screen is becoming a big deal for DreamWorks Animation (DWA, news, msgs), the company spun off from Steven Spielberg's privately held DreamWorks Studios in 2004 in a public stock offering.
Nickelodeon's new animated series "The Penguins of Madagascar" is based on DreamWorks' "Madagascar" movies; the hit TV series should start generating licensing revenue for the studio in January.
"This is a property that has the potential of a 10-year life span to it," DreamWorks Chief Executive Jeffrey Katzenberg told shareholders and analysts in a July 28 conference call.
DreamWorks Animation also has four holiday-themed specials in the works that will air on NBC -- two this fall and two in 2010 -- as well as two series in development at Nickelodeon.
The Glendale, Calif., studio expects revenue this quarter from pay-TV airings of the 2008 sequel "Madagascar: Escape 2 Africa."
TV networks have been forced by the weak economy to charge DreamWorks and other advertisers less for commercial time. "We're obviously going to be a very big advertiser with three releases next year," Katzenberg said during the conference call.
"Shrek 4," featuring the voices of Mike Myers, Paul McCartney, Justin Timberlake, Amy Poehler and others, is scheduled for release in May. Also due next year are the superhero spoof "MasterMind" and "How to Train Your Dragon," the studio's second offering in digital 3-D.
Although 3-D screens are rolling out more slowly than anticipated, there's reason to be "cautiously sanguine" about the technology's impact on the studio's bottom line, wrote analyst Tuna Amobi of Standard & Poor's Equity Research in a July 29 research note. "We see a renegotiated video game licensing pact with Activision taking root, and note continued strong traction of new business initiatives (TV specials, Broadway musicals)," said Amobi, who reiterated his "buy" rating on the stock and raised his 12-month price target to $35 from $32.
DreamWorks Animation appears on a monthly list of stocks created with MSN Money's StockScouter tool, which since 2001 has helped investors assess individual stocks' likelihood of outperforming the broad market.
Investment research firm Gradient Analytics uses StockScouter to create daily and monthly stock lists. MSN Money columnist Jon Markman collaborated with the company to devise strategies for putting the tool to work.
One of Markman's strategies involves investing an equal amount of money in each of the stocks in the computer-generated portfolio at the start of the month, selling them at the end of the month, then beginning the process again the next month. An investor who followed Markman's strategy since it was launched would have realized a gain of 178% through June 30, according to Gradient Analytics, and had an annual average return of 15%. Over the same period, the Standard & Poor's 500 Index ($INX) was down 24%.
The chart near the bottom of this page represents the benchmark StockScouter portfolio for August.
An IPO on hold?
Revenue rose 11% at online-payments unit PayPal in the three months through June 30, and the number of registered accounts grew by 20%.
Skype's revenue grew 25% in the second quarter; the service is now used by more than 480 million people worldwide to make telephone calls over the Internet. Skype, which started the year with 405 million users, is the largest provider of international calls, said research company TeleGeography.
But a legal dispute with Skype's founders jeopardizes the IPO plans.
EBay bought Skype for $2.6 billion in 2005, though the rights to some of its so-called peer-to-peer technology stayed with the founders, Niklas Zennstrom and Janus Friis, the entrepreneurs who created the file-sharing software Kazaa.
EBay is building new software to run Skype, but the company acknowledged in a regulatory filing that the software will be expensive and might not work.
Catch change in real time
"This global crisis is going to fundamentally change companies," Infosys co-founder Nandan Nilekani said in a recent interview with the Globe and Mail newspaper in Toronto. "They will have to reinvent themselves hugely; their supply chains, what they sell, how they sell -- all that is going to change and that is going to drive the business transformation of the kind that we do."
Infosys is India's second-biggest provider of IT services by revenues, after Tata Consultancy Services. It divides projects into components, which it executes simultaneously at clients' sites and its development centers in India and around the world.
The humdrum work of grinding out efficiencies will help the economy begin to grow again, said Nilekani, who expects Infosys to be a force in the wireless computing trend that lets retailers and others gather the data they need to catch things changing in real time.
As the economy improves, Infosys intends to wean itself from its reliance on relatively simple IT outsourcing jobs and compete for more sophisticated long-term management projects. It's retraining employees and recruiting more experienced personnel that will allow it to grab a bigger share of the $800 billion global IT business.
The Bangalore, India, company is willing to trade more predictable income for the high margins that the offshore operators and their investors have grown accustomed to.
Gas to go
The stock, which has a dividend yield of 8.6%, has lagged the broader market as the recession has suppressed demand for natural gas, used to generate about a quarter of the nation's electricity and heat more than half of American homes. A glut of gas has driven the price below $4 per million British thermal units, from more than $13 per million Btu last year.
Still, Chesapeake Energy (CHK, news, msgs), the nation's biggest independent producer, and others have kept on producing. As a result, storage levels are rising to the point where facilities and pipelines may soon be too full to handle new supplies, forcing producers to temporarily turn off some wells.
Producers and distributors are betting demand will soon catch up to supplies, as electricity use grows and new natural-gas-powered buses and trucks roll onto the nation's roadways.
An innovative mix
This score is combined with each company's StockScouter rating to come up with the list in the above chart. Only stocks with a final closing price above $3 are eligible for the list.