DreamWorks Animation SKG Inc., the studio behind "Shrek" and "Shark Tale," announced on Monday that the Securities and Exchange Commission has launched a probe into trading of its stock and the release of its first quarter results in May.
The company also canceled a planned $500 million secondary offering of stock. Jeffrey Katzenberg, chief executive of DreamWorks Animation, said in a statement that the reason behind withdrawing the stock offering was because of the low valuation of the company's shares. The company's chief financial officer, Kris Leslie, pointed to disappointing home video sales as being the reason behind its second quarter loss.
"While it is too early to determine if these changes are temporary or permanent, we think it is prudent at this time to adjust our guidance to reflect higher-than-expected returns, as well as revisions to our video forecasts," Leslie said in a statement. DreamWorks adjusted its estimates following a review of sales and inventory data from its distributors, and said that it has increased reserves set aside for returned products.
DreamWorks said that it is voluntarily complying with the informal inquiry concerning trading in its securities and the disclosure of its May financial results.
