Imax experience: Falling shares

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Shares of Imax Corp. fell another 3% Tuesday after diving 8.9% on Monday. Imax executives said late last week that they are no longer seeking a suitable buyer for the giant-screen company.

Long-term Imax investors are no strangers to the volatility of shares, having seen dips of Monday's magnitude, or worse, on a couple of occasions in just the past six months.

Shares closed Tuesday at $3.60 and are off 65% since August, when the company first warned that it wasn't getting the kind of bids it had expected when it put itself up for sale in March. The stock was the biggest loser Monday on The Hollywood Reporter Showbiz 50 index.

"While Imax received interest from multiple parties in our process of exploring a potential sale or merger of the company, none ultimately indicated a willingness to acquire the company at an acceptable valuation," Imax said Friday after Wall Street's closing bell.

Imax has been through this exercise before, putting itself up for sale six years ago only to take itself off the auction block when suitable bids failed to materialize.

Back then, the general malaise of the exhibition industry and a bursting of the technology stock bubble was blamed. This time around, it might have been a host of things, including a lousy quarterly financial report, disappointing boxoffice for "The Ant Bully" and a 3-D plan for "Happy Feet" that was scaled back to 2-D.

Imax also isn't expected to benefit as much this year as last from another re-release of the Imax 3-D version of "The Polar Express," which took in $45 million two years ago and $15 million last year at Imax screens. This year, it's playing at fewer locations.

Analysts maintain that positive catalysts for Imax could be 20th Century Fox's "Night at the Museum," which opens Friday, and its Imax digital-movie projector that is due in 2008. Some also are bullish on the company's international prospects, noting there already are Imax screens in 40 countries.

On Monday, Susquehanna Financial Group analyst Michael Kelman asked in a research note, "Is this the last shoe to drop?"

The analyst said that because Imax's stock price had suffered so badly in latter half of the year he "was somewhat optimistic that a transaction could be consummated."

While praising the company's plans for digital-projection technology and joint-venture partnerships, he stuck to his "neutral" rating on the stock, predicting limited upside and limited downside for the stock in the near term.
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