Imax shares fall as analyst sees competitors emerging with their own large-screen formats

Imax falls as analyst eyes emerging competition

LOS ANGELES — Shares of giant-screen movie technology company Imax Corp. fell Wednesday after an analyst said No. 2 theater chain AMC Entertainment will roll out its own oversized format in the U.S., which could hurt Imax’s revenue.

Imax shares slid $1.39, or 9.8 percent, to close at $12.86. The stock has ranged from $3.90 to $14.60 over the past year.

Eric Wold, an analyst with Merriman Curhan Ford, wrote in a research note that AMC Entertainment has now opened an “Enhanced Theater Experience,” or ETX, screen at Walt Disney World in Orlando, Fla., after testing the system in Canada.

Three more of AMC’s ETX theaters are coming soon to Dallas, Los Angeles and Burbank, Calif., he said, citing the company’s Web site.

Rich Gelfond, the chief executive of Imax, responded to the report Wednesday, saying that AMC’s ETX screen was put in at Walt Disney World because the theater there didn’t fit Imax specifications.

“We’re picky about the locations we go into and have provide the Imax experience,” Gelfond said in an interview. “My conversations with AMC executives today have reinforced that this is a complementary strategy to Imax, not a competitive strategy.”

But the move comes on top of No. 3 theater chain Cinemark Holdings Inc. developing its own large-screen format called Cinemark XD. Cinemark operates 16 Cinemark XD screens and plans to open 30 to 40 more this year.

Gelfond said Imax is suing Cinemark for patent infringement and breach of contract.

Wold wrote in his note: “We continue to believe that exhibitors will begin to migrate away from Imax … in order to retain more profitability.”

He noted Imax keeps about half of the profits from joint-venture theaters, including from ticket and concession sales.

He added that movie studios, who also share revenues with Imax on film releases, could make more money on their 3-D movies by just releasing them on regular 3-D screens instead of Imax 3-D screens.

Gelfond said Imax screens accounted for a large percentage of the gross ticket sales for blockbuster 3-D movies such as “Avatar” and “A Christmas Carol,” despite Imax’s relatively small share of the total screen count.

Wold maintained his “Sell” rating on the shares.

Out of the 12 analysts tracked by Thomson Reuters, six had “buy” ratings, four had “strong buy” ratings, two had “hold” ratings and none had a “sell.”