Double Whammy for IMAX
Very nice release and reaction for Imax (IMAX -- click to register for free RT streaming quote) today. Not only did they beat their guidance (they were in line with analyst estimates), but they also announced that they're exploring "strategic alternatives" for merger, partnership or purchase by another company that can help them leverage their success.
The market hasn't been crazy about Imax and hasn't bought into the story that I believe, that they're reaching an inflection point where the growing global installed base and the increasing numbers of (and huge success of) Hollywood films on IMAX will feed on themselves, bring more theaters in, and provide a large ongoing revenue stream as IMAX begins to get a small cut of ticket sales.
But the market loves this news -- if there's one thing people on the Street love, it's a buyout. The shares spiked up this morning and are still up over 10% as I type this.
Now, I'm happy with the earnings and with their backlog of installations and their lineup of great films for 2006 -- Superman Returns, V for Vendetta, a few 3D animated films ... good stuff that should work well.
But the earnings alone certainly wouldn't have gotten this response on the Street. What I think is especially telling is not only that they're considering putting themselves up for sale, but that they're doing so from a position of strength. This isn't a weak company looking for help, but a company that is building in strength looking for a partner who can leverage that. The fact that they already had some unsolicited offers tells me that other people agree that the company isn't fairly valued at these prices, and it tells me that any buyout ought to come at a respectable premium.
Of course, that might not happen. The last company I owned that was bought out, Provide Commerce by Liberty Media, was also bought during a time of improving performance. The difference there was that the stock spiked up before the buyout announcement, which makes one suspicious, but the final price ended up being not much of a premium at all to the market prices at the time of the announcement. You never can tell.
Still, I like Imax and they're performing well. I would prefer to see them stand alone and get the kind of growth that I think they're capable of, but it seems clear that they believe their growth is stunted somewhat by their small size and they believe they could do better with a well-heeled partner or owner -- which at this point could probably be anyone, from one of their partners like Time Warner or Sony to a private equity firm or a theater company (though most of the theater companies aren't exactly flush with cash).
As long as they pay me a fair price, that's fine with me.
The market hasn't been crazy about Imax and hasn't bought into the story that I believe, that they're reaching an inflection point where the growing global installed base and the increasing numbers of (and huge success of) Hollywood films on IMAX will feed on themselves, bring more theaters in, and provide a large ongoing revenue stream as IMAX begins to get a small cut of ticket sales.
But the market loves this news -- if there's one thing people on the Street love, it's a buyout. The shares spiked up this morning and are still up over 10% as I type this.
Now, I'm happy with the earnings and with their backlog of installations and their lineup of great films for 2006 -- Superman Returns, V for Vendetta, a few 3D animated films ... good stuff that should work well.
But the earnings alone certainly wouldn't have gotten this response on the Street. What I think is especially telling is not only that they're considering putting themselves up for sale, but that they're doing so from a position of strength. This isn't a weak company looking for help, but a company that is building in strength looking for a partner who can leverage that. The fact that they already had some unsolicited offers tells me that other people agree that the company isn't fairly valued at these prices, and it tells me that any buyout ought to come at a respectable premium.
Of course, that might not happen. The last company I owned that was bought out, Provide Commerce by Liberty Media, was also bought during a time of improving performance. The difference there was that the stock spiked up before the buyout announcement, which makes one suspicious, but the final price ended up being not much of a premium at all to the market prices at the time of the announcement. You never can tell.
Still, I like Imax and they're performing well. I would prefer to see them stand alone and get the kind of growth that I think they're capable of, but it seems clear that they believe their growth is stunted somewhat by their small size and they believe they could do better with a well-heeled partner or owner -- which at this point could probably be anyone, from one of their partners like Time Warner or Sony to a private equity firm or a theater company (though most of the theater companies aren't exactly flush with cash).
As long as they pay me a fair price, that's fine with me.
Labels: IMAX
This article posted by One Guy @ 3/09/2006 10:02:00 AM 0 comments
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