UPDATE: Paul Allen Cuts DreamWorks Stake, Leaving Board >DWA

LOS ANGELES (AP)-- Microsoft Corp. (MSFT) co-founder Paul Allen will sell alarge portion of his stake in DreamWorks Animation SKG Inc. (DWA) and resignfrom the board, the company said Monday.

Allen's Vulcan Inc. will sell 10 million of his shares in a registered publicoffering. DreamWorks Animation will buy an additional $150 million worth ofAllen's shares, the Glendale, Calif., company behind the "Shrek" films said.

After the transactions, Allen will still own about 6 million shares.

"The reduction in our position in DreamWorks Animation is part of an ongoingeffort to rebalance the Vulcan Capital portfolio," Allen said in a statement. "Iam pleased to have been a principal investor in DreamWorks since its inceptionand proud of the company's many successes to date."

Allen invested more than $500 million in DreamWorks SKG Inc. when it launchedin 1995 as a combination live action and animation studio.

DreamWorks Animation went public in 2004 in large part to begin repayingAllen's investment.

The company halted plans for an additional stock offering to buy Allen's stakein 2005 when its shares tumbled after it sold far fewer "Shrek 2" DVDs thananticipated.

The stock has since rebounded. Allen sold about 12 million shares lastNovember.

(END) Dow Jones Newswires 08-06-07 1823ET Copyright (c) 2007 Dow Jones & Company, Inc.