The first casualty of Walt Disney Co.'s acquisition of Pixar Animation Studios came Monday when the Burbank entertainment giant shuttered a computer animation unit created to make sequels to such Pixar hits as "Toy Story" and "Finding Nemo."
Thirty-two employees, or nearly 20% of the 168 artists, production managers and support staff, were told they would lose their jobs effective May 26.
The remaining 136 will be absorbed into Disney's feature animation division and redeployed to work on such productions as "Meet the Robinsons," "Rapunzel" and "American Dog."
In a statement, Disney confirmed Monday's developments with The Times and said it would help laid-off employees find new work. At least half a dozen or more hired to work on "Toy Story 3" were foreigners working in the U.S. on visas.
Workers should find themselves in demand, with computer animation enjoying a boom. Studios such as DreamWorks Animation SKG Inc., 20th Century Fox and Sony Pictures are poised to release a slew of digitally animated movies this year.
Dubbed "Circle 7" after the Glendale street where the unit sits, the sequels operation was quietly set up last year by former Disney Chief Executive Michael Eisner at a time when Disney's lucrative partnership with Pixar was strained and in danger of dissolving. Rivals derided the attempt to replicate Pixar's unique creativity, nicknaming the operation "Pixaren't."
Disney had the right to make Pixar sequels under its previous distribution agreement. But its decision to move ahead irked Pixar executives, who worried that a botched effort would hurt their company's reputation.
All of that changed in January, when Disney agreed to buy Pixar for $7.4 billion. Disney CEO Bob Iger and Pixar Chairman Steve Jobs pledged that any Pixar sequels would be produced at Pixar's Emeryville, Calif., headquarters using artists who worked on the originals.
In addition, Disney's core animation operation will now be run by Pixar creative director John Lasseter -- who directed "Toy Story" and whose next film, "Cars," is due out this summer -- and Pixar President Ed Catmull.
Disney declined to comment about the future status of Circle 7 chief Andrew Millstein, who announced the layoffs to his staff at a noon meeting.
But it is believed that he will look for another job within Disney. Millstein, who once ran Disney's now-defunct Florida animation studio, has worked at Disney for nine years.
Also unclear is what will become of the multimillion-dollar computer animation facility in Glendale, although it is likely the company would use it for future productions.