updated 2/11/2005 8:29:36 AM ET 2005-02-11T13:29:36

Despite the strength of “The Incredibles,” profits at Pixar Animation Studios dropped 34 percent in the fourth quarter from a year ago, when “Finding Nemo” DVDs went on sale.

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The Emeryville, Calif.-based company posted net earnings of $55.2 million, or 91 cents per share, in the quarter ended Jan. 1, down 34 percent from $83.9 million, or $1.44 per share, in the same period the previous year.

The earnings still beat Wall Street estimates. Analysts surveyed by Thomson First Call had expected earnings of 77 cents per share.

Revenue also dropped to $108.9 million compared to $164.8 million in the same quarter last year.

The studio gained revenue during the quarter from the box office performance of its latest movie, “The Incredibles,” which opened last November and will be released on home video next month.

Pixar co-finances its films and splits revenue with The Walt Disney Co. “The Incredibles” is the fourth film to be delivered under a five-film deal with Disney. Pixar will deliver its last film under the deal, “Cars,” in 2006.

This will be the first year for Pixar without the release of a theatrical feature. The company said Thursday it expects earnings of between 85 cents and 95 cents per share in the first quarter, mostly from home video sales of “The Incredibles.” The company did not give a forecast for the full year.

Pixar chief executive Steve Jobs said the company has eight directors working on future films and expects to release one film each summer. Jobs said the company would consider releasing more than one film a year in the future.

Jobs also said Pixar has decided not to participate financially or creatively in making sequels to the films made under its Disney deal. Disney has already announced plans for a “Toy Story 3” as well as sequels to “Monsters Inc.,” “Finding Nemo” and “The Incredibles.”

The company also said it was waiting to negotiate a new distribution deal until Disney announces a successor to CEO Michael Eisner. Jobs said the possibility that an executive from another company could be hired at Disney “could effect the desirability of another studio in our eyes.”

Jobs also dismissed a comment by Eisner at Disney’s recent analyst meeting that the human characters in the current batch of Disney/Pixar films “look pretty pathetic.” Eisner made the comment about the state-of-the-art computer techniques being used to create upcoming Disney films.

“I know our films don’t stack up against films like ’Atlantis’ or ’Emperor’s New Groove,’ or ’Treasure Planet,”’ Jobs said wryly, referring to three less-than-successful Disney animated films. “We just kind of wrote that off to Michael being a loose canon.”

For the full year, Pixar reported net income of $141.7 million, or $2.38 per share, compared to $124.8 million, or $2.17 a share, for the previous year. Revenue for fiscal 2004 rose to $273.5 million from $262.5 million the previous year.

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