Pixar Posts Drops in Revenue, Profit

Pixar Animation Studios Inc. on Tuesday posted a lower fourth-quarter profit but still beat Wall Street estimates as the company behind “The Incredibles” and other hit films reported what might be its last results before becoming part of Walt Disney Co.

Pixar said net income was $30.9 million, or 25 cents a share, compared with $55.2 million, or 45 cents, in the year-earlier quarter, when it benefited from the foreign release of “The Incredibles” and pay-television revenue for “Finding Nemo.”

Revenue fell to $55.6 million in the quarter, compared with $108.9 million a year earlier.

The earnings topped estimates of analysts, who had expected net income of $20.8 million, or 17 cents a share, and revenue of $44.7 million, according to Reuters Estimates.

Sanders Morris Harris analyst David Miller said Pixar’s results showed the strength of its brand, with the 3-year-old film “Finding Nemo” and the 2004 release “The Incredibles” still contributing strongly to the bottom line.

“That’s how you know it’s evergreen product,” Miller said. “Anyone out there who is skeptical about the multiple that Disney is paying [for Pixar] should look at this earnings release. We think it’s a great deal for Disney.”

Disney has agreed to buy Pixar in an all-stock deal worth $7.4 billion when it was announced in January.

Pixar’s fourth-quarter revenue was driven by worldwide television licensing and home video sales of “Finding Nemo,” and consumer product revenue and worldwide home video sales of “The Incredibles.”

The company’s library titles contributed $19.1 million in the quarter, led by the international DVD release of 1995’s “Toy Story,” and 1999’s “Toy Story 2.”

In a statement, Pixar Chief Executive Steve Jobs said the fourth-quarter report would probably be the company’s last before being folded into Disney, suggesting the transaction would close before the company must post its first-quarter results in May.

A Disney spokesman had no comment on when the deal would close.

Jobs, who will take a seat on Disney’s board of directors once the deal is completed, described 2005 as Pixar’s most profitable year ever.

The company did not hold a conference call with investors.

Pixar, now in its 10th year as a publicly traded company, finished the year with $1 billion in cash and investments and no debt on its balance sheet.

The company’s next film, “Cars,” is set for release June 9. The film after that, “Ratatouille,” about a rat who lives in a French restaurant, is due out in the summer of 2007.

In its annual report, Pixar said it had entered an agreement with Disney for the distribution of “Ratatouille” that would take effect only if the acquisition was not completed.

Pixar shares rose 22 cents to $64.03.