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Pixar Profit Falls 72% Without New Movie

The studio beats expectations, earning $13.2 million. Sales drop to $30.2 million. The firm expects a boost this quarter from the home video release of 'Nemo.'

November 07, 2003|Richard Verrier | Times Staff Writer

Strong box-office revenue from its hit movie "Finding Nemo" delivered better-than-expected results for Pixar Animation Studios in the third quarter, but profit paled from a year ago because the studio lacked a new movie or home video release to bump its numbers.

The Emeryville, Calif., company's net income fell 72% to $13.2 million, or 23 cents a share, from $46.9 million, or 87 cents, a year earlier. Revenue fell to $30.2 million from $102.5 million a year earlier.

The decline reflected the fact that Pixar didn't release a movie during the quarter and faced a tough comparison from a year ago, when the pioneer of digital animation saw an increase from DVD sales of "Monsters, Inc."

Moreover, most of the $339 million in North American box-office ticket sales from "Finding Nemo" occurred during the second quarter.

Worldwide box-office receipts from "Finding Nemo" totaled $424 million through the quarter ended Sept. 27.

However, DVD and international box-office sales for "Finding Nemo" are expected to boost profit in the fourth quarter.

Pixar released "Finding Nemo" on home video Tuesday, selling 8 million copies and breaking the first-day sales record for videotapes and digital videodiscs, according to Pixar's production and distribution partner, Walt Disney Co.

"With 'Finding Nemo' making its theatrical debut in many of the larger international territories throughout the fall, Pixar is on track to have the best year in its history," Pixar Chief Executive Steve Jobs said in a statement.

Despite the profit decline in the third quarter, the results far exceeded Wall Street estimates.

Pixar was expected to earn 13 cents a share, the average estimate of analysts polled by Thomson First Call. Sales were expected to be $21.8 million.

"These are very strong results," said Michael Savner, an analyst with Banc of America Securities.

Shares in Pixar rose 20 cents to $70.16 on Nasdaq before the results were released. They gained 84 cents in after-hours trading.

In a conference call with analysts, Jobs said Pixar was continuing its talks with Disney but declined to discuss details.

Pixar is determined to negotiate a more favorable financial arrangement with Disney, which splits half of the profits of the Pixar movies and also gets a distribution fee.

"We know what we're worth in the marketplace," Jobs said. "If we can't strike a deal with Disney, then we'll talk with the rest of the companies."

The agreement covers two remaining movies: "The Incredibles," scheduled for a November 2004 release, and "Cars," due out in 2005.

During the conference call, Jobs said Pixar had no intention of producing more than one movie a year or using its pile of cash to diversify into other businesses.

"What's most important for us is to never take for granted how hard it is to make one great animated movie a year," he said.

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