Home-Video Sales of ‘Incredibles’ Supercharges Pixar 1st-Quarter Earnings

Pixar, the computer-animation film studio run by Steven Jobs, said first quarter profit more than tripled to $81.9 million as revenue surged on homevideo sales of its superhero film “The Incredibles.” The company’s shares rose as much as 8% in extended trading.Net income jumped to 67 cents a share from $26.7 million, or 23 cents, a year earlier, the Emeryville, Calif.-based company said yesterday in a statement. Sales almost tripled to $161.2 million from $53.8 million. The profit topped 47 cents a share, the average estimate of 16 analysts polled by Thomson Financial.Mr. Jobs, 50, is extending Pixar’s box-office success with the home-video release of “The Incredibles,” a comedy about a family of superheroes who are forced to set aside their powers to live a quiet suburban life. The film opened in theaters on November 5 and sold 5 million video copies on March 15, its first day in stores.“The vast majority of this is the ‘Incredibles’ DVD,” Lehman Brothers analyst Anthony DiClemente said. Mr. Di-Clemente, who rates Pixar shares “equal weight,” estimates that at least 80% of the quarter’s revenue came from sales of “Incredibles” digital video discs.Pixar shares soared as much as $3.71 to $49.98 in extended trading at 4:18 p.m. New York time, after the company announced its results. Earlier they rose 42 cents to $46.27 in Nasdaq Stock Market composite trading. They have risen 40% in the past year through the Nasdaq close.Pixar’s first-quarter sales were expected to be $116.3 million, the average estimate of 13 analysts polled by Thomson. Pixar said on a February conference call that it expected first-quarter earnings to be 85 cents to 95 cents a share, before the company split its stock 2-for-1 on April 19, doubling the number of shares to 200 million.William Blair & Company analyst Ralph Schackart estimates that Pixar will sell a total of 42 million digital video discs and videocassettes of “The Incredibles.” By comparison, Pixar has sold about 49 million video units of its 2003 hit “Finding Nemo,” he said. The Chicago-based Mr. Schackart rates Pixar shares “outperform” and doesn’t own them.Mr. DiClemente estimates that the company will sell 40 million home-video units of “The Incredibles.”Box-office sales of “The Incredibles” totaled more than $631 million, according to film tracker Box Office Mojo. That tops the company’s forecast of more than $625 million.When the first-day video sales figures were released, Disney and Pixar said “The Incredibles” was “on track to be the best-selling DVD and video of 2005.” Pixar reiterated that forecast yesterday.In addition to creating “heart-warming” films that transfer well to home video, the studio is capitalizing on the trend of consumers collecting DVDs, Mr. Schackart said. In 1999 the average American consumer spent 49 hours a year watching home videos. Last year that number jumped to 78 hours, he said.“The home-entertainment digital media space has a tail wind behind it,” he said in an interview. Pixar’s “premium content will be that much more valued.”Walt Disney, the second-largest American broadcasting and entertainment company, has an agreement to cofinance and distribute Pixar films, though that contract expires with Pixar’s June 2006 release of “Cars.”The companies split costs and profits equally after Burbank, Calif.-based Disney receives a distribution fee.Mr. Jobs has said he wants a new distribution partner in place this year.Disney’s president, Robert Iger, who will become the company’s chief executive in September, said in a March interview that he wants to talk to Pixar’s Mr. Jobs about renewing their film partnership after “Cars.”“Cars” tells the story of a group of classic automobiles on an adventure on U.S. Route 66.Pixar has used its patented software to produce computer-animated films including “Toy Story,” “A Bug’s Life,” “Toy Story 2” and “Monsters, Inc.” Its films have grossed more than $3.2 billion in theaters worldwide.

Home-Video Sales of ‘Incredibles’ Supercharges Pixar 1st-Quarter Earnings

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