Iwerks to Report Loss for Quarter as Revenue Falls

Iwerks Entertainment Inc., a Burbank supplier of special-format movie theaters and virtual-reality attractions, said it will report a loss for its fiscal third quarter ended March 31 on an 11% decline in revenue to approximately $10 million.

A year earlier, Iwerks earned $2.3 million on $11.2 million in revenue.

The company said its third quarter results were hurt by increased research and development costs, delayed closings of expected sponsorship contracts for its touring theater system, weaker-than-expected winter attendance at the theaters and higher fixed costs. It also cited reduced theater system sales as a reason for the loss, which Iwerks said is due to its shift away from that business and toward development of its Cinetropolis urban entertainment centers, which combine theaters and virtual-reality games under one roof.

The reduced sales are also expected to “have a continuing impact on fourth-quarter results,” Iwerks said.

Iwerks’ announcement Thursday sent its stock tumbling $5.25 a share on Friday to $14.

The company’s initial public offering last October was one of the hottest stock sales of the year. On the first day of trading, Iwerks’ stock opened at $33 a share--nearly double the $18 offering price--and later hit $37. On Monday, Iwerks’ stock closed unchanged at $14.