‘Finding Nemo’ Buoys Pixar’s Earnings -- and Negotiating Clout

A little fish delivered a whale of a quarter for Pixar Animation Studios.

The Emeryville, Calif.-based company Thursday reported a substantial jump in its second-quarter profit, largely because of the success of its animated “Finding Nemo,” which has generated more than $320 million in domestic box-office receipts since it came out in May.

Pixar said it earned $19.5 million, or 34 cents a share, compared with $10.4 million, or 20 cents, in the year-earlier period.

Revenue jumped to $48.9 million from $22.8 million.

The results -- boosted by strong home video sales of its other successful titles -- far exceeded analysts’ consensus estimate of 22 cents a share.

“Pixar is now five for five,” said Chief Executive Steve Jobs, referring to his studio’s string of hits, beginning with “Toy Story” in 1995.

“ ‘Finding Nemo’ has passed ‘The Lion King’ to become the most successful animated film ever released in North America,” Jobs said.

Pixar’s strong second quarter is certain to give the debt-free company more negotiating clout with its marketing and distribution partner, Walt Disney Co., which splits half the profit with Pixar.

The 50-50 arrangement was reached when Pixar was in its infancy, and it’s expected to receive a much larger slice when the current contract expires in 2005.

In fact, Jobs, who co-founded Apple Computer Inc., used Thursday’s conference call with reporters to note that Pixar’s movies had outperformed Disney’s in-house animated films in recent years.

A source close to Pixar said the company recently proposed a dramatic shift in the revenue-sharing agreement. Disney executives have said they want to maintain a relationship, even under different terms.

Jobs said he too would prefer to stay tied to Disney. But he added that Pixar was prepared to partner with another studio if necessary.

“We are very clear on what a new deal for Pixar will look like,” Jobs said. “If we can’t reach a deal with Disney ... Pixar has several other viable options.”

Pixar is said to be pushing for a deal that would allow it to retain ownership of its films while paying Disney a distribution fee of less than 10%.

The company is bound to Disney for two more movies: the 2004 film “The Incredibles” and the 2005 production “Cars.”

“I think that at the end of the day, they will agree that their symbiotic relationship is mutually beneficial,” said David Miller, an analyst with Sanders Morris Harris Group in Los Angeles.

Shares of Pixar dropped $1.94 to $65.56 on Thursday on the Nasdaq Stock Market. Pixar released its results after markets had closed.