Tuesday, July 10, 2007

Can Harry Work His Magic on IMAX?

IMAX Corp. is a technology company which specializes in larger than life films based on its 70mm film format. The company has been growing rapidly as it continues to ink theater deals. The reason for this is partly because of the company's increasingly attractive technology in this age of inexpensive high definition television and surround sound. Simply put, one can not recreate the IMAX experience in their home. It's just not possible to find a 88 foot high definition TV.

From a economic perspective IMAX theaters are a gold mine. We see this clearly if we compare the per screen numerical average of a standard theater vs. an IMAX theater. Spider Man 3, for example estimated $35,540 and $57,000 for a standard and an IMAX theater respectively. It's no wonder why some analysts estimate that China's IMAX screen count is supposed to triple to 26 before 2011.

The question is why have shares languished some 50% from their September 2006 highs? While I hate to cast blame, I feel obligated to in this situation. I could understand one CEO waffling the job of running a multi-national, but two? Is that even possible? How can two CEOs, both receiving hansom six figure salaries run a company so poorly? This is where I become confused, but I will leave it at that. Through a series of mismanagement, delinquent filings and mountains of back dated theater installments; shareholders find themselves irritated and broke. While I don't own any shares personally and only purchased call options today, I can't help but feel as irate as the shareholder who bought last May. It's almost as though management is trying to sink their own ship(Weren't they trying to sell the co. last year?). If anything the technology is the only thing keeping this drift wood afloat, for companies such as Sony and Time Warner continue to choose IMAX as the preferred method for releasing their blockbusters.

Once again we find ourselves on the cusp of yet another slam dunk flick as Harry Potter and the Order of the Phoenix is due for release today. IMAX shares responded accordingly today as they powered through their 200 DMA on x2 average daily volume. Despite the nearly 9% move today, shares could still run farther if the company actually files their fiscal 2006 and 2007 10-K in a timely fashion. However, with managements track record er lack thereof, maybe we shouldn't be so naive...again.

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