Imax experience: falling shares

Failed sale attempt doesn't screen well on Wall Street

Shares of Imax Corp. plunged 8.9% on Monday, the first day the stock has traded since executives said Friday that it was 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 Monday at $3.71 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, blame was placed on the general malaise of the exhibition industry and a bursting of the technology stock bubble. This time, 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 rerelease of the Imax 3-D version of "The Polar Express," which took in $45 million two years ago and $15 million last year from 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 that 40 countries already have Imax screens.

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

He said that because Imax's stock price had suffered so badly in the 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.