Imax Gets Bigger (By Getting Smaller)

High in the Himalayas, Araceli Segarra lays an aluminum ladder across an icy crevasse. Actually, it's two ladders lashed together, a bridge that wobbles precariously when the crampons on her clunky boots clang against the rungs. She glances below into infinite space. You share the view, and gulp. "When you look down, you wonder how deep is that crevasse," says Segarra's voice-over. "Well, I don't want to find out." Your stomach is already making the trip.

Luckily, you're just a voyeur at Segarra's experience, sitting safely in a stadium-style seat at the Sony IMAX Theatre on Manhattan's Upper West Side. Your nose seemingly pressed against an eight-story-high screen, you're living that perilous moment through the IMAX film Everest. Shakun Lakhani, a New Jersey homemaker, was so awed by the film that she went back a second time. "It is beyond your imagination," she said. "You are experiencing Mount Everest as if you're climbing it yourself." That's because David Breashears and Steve Judson went to the Himalayas in May 1996 to capture on large-format film the ascent of three climbers. The project itself crossed paths with a tragedy: an angry Everest had just claimed the lives of eight other climbers in the single most horrific disaster in its history.

Riding the critical success of Everest, IMAX Corp., of Mississauga, Ontario, plans to expand by taking this sensory overload to a megaplex near you. "The company is going through a huge shift from institutional sites into more commercial sites like multiplexes," says Kevin Skislock, a senior analyst at investment bank L.H. Friend, Weinress, Frankson & Presson.

The 80-ft.-high theater-system screen is a major attraction at museums, science centers and vacation destinations like Las Vegas. Now the company is bringing scaled-down versions to smaller cities, betting that even a 55-ft. version will shake 'em up in such places as Tulsa, Okla., and Fresno, Calif. "The IMAX format is the best theater presentation in the world, bar none," raves Bruce Olson, president of Marcus Theatres, which has signed on to build two 3-D theaters, in Columbus, Ohio, and Addison, Illinois. Since 1997, IMAX has signed deals for 73 new theater systems from Canada to New Zealand. By year's end, 60 IMAX theaters with 3-D capability will be operating.

Going smaller is the strategy devised by IMAX's co-CEOs, Bradley Wechsler, 46, and Richard Gelfond, 42, two former investment bankers who were part of a group that acquired IMAX for $90 million in 1994. They saw in the Canadian firm a sleepy moneymaker. IMAX, founded in 1967, was "run like a candy store by its five original founders," says Wechsler. "There was really no business discipline." Since then, revenues have doubled, to $158.5 million in 1997, while profits have increased, to $20.7 million from a loss of $11.6 million in 1994. In the first quarter, revenues were up 11%, to $36.1 million.

Since IMAX went public in June 1994, its stock price has risen from about $6.75 a share to $29 in March before settling at about $22. That makes the company worth around $650 million. The two co-bosses took advantage of that upturn to sell 100,000 shares each recently, but analysts still see IMAX as a coming attraction. "It's a very undervalued company," says senior analyst Steven Bernard at Everen Securities. "We don't think it's well known on Wall Street."