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Pixar reports profits up 70 percent

Pixar Animation Studios said Thursday that third-quarter profit surged 70 percent as revenue continued to climb and said its newest film, "The Incredibles," is posting strong returns.
/ Source: Reuters

Pixar Animation Studios reported higher third quarter earnings Thursday on home video sales of its five animated films, most notably last year’s hit “Finding Nemo.”

Pixar, the maker of “Monsters, Inc.” and “Toy Story,” reported net income of $22.4 million, or 38 cents per share for the quarter ended Oct. 2, compared with $13.2 million, or 23 cents per share in the same period last year.

The results beat the estimates of analysts surveyed by Thomson First Call, who had expected earnings of 24 cents per share.

Revenue rose to $44.5 million, compared with $30.2 million in the same period last year.

Pixar, based in Emeryville, Calif., released its sixth feature film, “The Incredibles,” earlier this month. The movie earned $70.3 million in its opening weekend. Results from that film were not included in the third quarter.

“Pixar is now six for six and we are hard at work on ’Cars,’ our studio’s seventh feature film,” Pixar chief executive Steve Jobs said in a statement.

The company said that, based on expected theatrical revenue from “The Incredibles,” it expects its full year profit to be in a range from $2.10 per share to $2.20 per share.

Jobs also took a shot at this weekend’s main competition, “The Polar Express,” a computer animated tale from Warner Bros. Preliminary estimates show the movie earned $2.6 million on Wednesday, its opening day in theaters, compared to about $4.6 million for “The Incredibles,” which is in its second week.

“Fortunately, ’The Incredibles’ derailed ’The Polar Express’ its first day out of the station,” Jobs said in a conference call with analysts.

Pixar’s next film, “Cars” will be released by The Walt Disney Co. next year. It is the last film under a contract between the two companies. Pixar has been talking to other film distribution companies about a new deal that would have Pixar finance and own its films and pay a studio a set distribution fee.

Now, Disney covers half the financing for each Pixar film and keeps 50 percent of the profits, plus a distribution fee.

Jobs said the company is not in serious negotiations for a new deal with any studio and is waiting, in part, until Disney names a new chief executive to replace Michael Eisner, who is retiring in 2006. Disney’s board has said it expects to name Eisner’s successor by June.

“As observers, it looks like Disney seeking a new CEO could have several outcomes, one of which is musical chairs among the other studios,” Jobs said. “So who knows where people are going to end up?”

Jobs said Pixar does not need to have a new deal in place until next year.

He also said Pixar is considering releasing its films in the summer rather than the holidays, a move that would mean an 18-month release delay to make the change. Pixar now releases one film each year.

Summer movies seem to make more money, Jobs said, and it is better to release home video for the holidays — after a summer theatrical run — than to follow a holiday release with home video in the spring.

For the first nine months of the year, Pixar reported net income of $86.5 million, or $1.46 per share, compared with $40.9 million, or 72 cents per share in the same period last year.

Revenue for the first nine months was $164.6 million, compared with $97.7 million in the same period last year.

Shares of Pixar rose $2.68 to $79.94 at the end of regular trading on the Nasdaq Stock Market. They gained another 3.8 percent, or $3.06, in the extended trading session.

Pixar Animation Studios Inc. on Thursday reported that third-quarter profit rose 70 percent in the quarter before the release of its new hit, “The Incredibles.”

Chief Executive Steve Jobs also said the company would take its time choosing a distribution partner for its films in 2006 and beyond and needed to have a deal in place next year.

Jobs told a conference call that Hollywood could see a round of ’musical chairs’ as Pixar’s current partner, Walt Disney Co., looked for a new chief executive and that Pixar would be wise to see how things changed.

Net income was $22.4 million or 38 cents per share in the third quarter, compared with $13.2 million, or 23 cents per share in the year-ago quarter when Pixar was preparing to release “Finding Nemo,” the second-highest-grossing animated film at the U.S. box office.

Third-quarter revenue was $44.5 million, compared with $30.2 million in the same period last year.

The company said that products tied to “Nemo” and “Toy Story 2” had helped boost profits, along with a reduction in marketing costs for “Nemo” videos, higher-than-expected animation software sales, and a reduction in Pixar’s effective tax rate.