Three Moguls Aboard

No one doubted the artistic talent at DreamWorks SKG when it was launched in 1994 amid hype befitting its superstar founders, Steven Spielberg, Jeffrey Katzenberg and David Geffen. Overlooked in the face of such Tinseltown royalty, though, was that none were proven CEOs--a niggling detail that has become hard to miss after a series of gaffes since the trio sold shares of its animation division to the public last year.

First the newly public DreamWorks Animation appears to have mishandled first-quarter earnings information. In May its shares fell 5% just before the company disclosed disappointing results. The Securities and Exchange Commission is looking into whether there was any insider trading, and six shareholder lawsuits stemming from the stock drop have been filed. The company botched forecasts for home-video sales of Shrek 2 not once but twice, blowing its credibility on Wall Street and prompting the company to scrap a planned $500 million stock sale. "Are they rookies? Do they have any controls?" asks analyst David Miller at Sanders Morris Harris, echoing concerns of many investors.

That is hardly the pace-setting media juggernaut the founders, with their impeccable pedigrees, envisioned. Spielberg is the creative force behind Jaws, Jurassic Park and the new War of the Worlds. Katzenberg was Disney's animation genius. Geffen discovered the Eagles and introduced Guns N' Roses to the world. Together the moguls planned to move beyond movies and music to TV, toys and the Internet.

Their dreams aren't dead yet. But some Wall Street analysts wonder whether the moguls need to hire a new CEO, a role Geffen took on at investors' request. Spielberg just wants to make movies; Katzenberg is CEO of the publicly traded animation company, which remains majority owned by DreamWorks' founders and early investors. Success has been spotty on all fronts. DreamWorks never built the studio complex it had planned and gave up on its TV, record and Internet ambitions. Its animated movies--other than the Shrek franchise--have been unspectacular. "Probably our eyes were bigger than our stomachs," Geffen tells TIME. "We made a lot of mistakes, and hopefully, we'll make fewer in the future." Katzenberg declined to comment.