Pixar profit boosted by "Nemo"

LOS ANGELES (Reuters) - Pixar Animation Studios Inc on Tuesday reported a 16 percent rise in quarterly profit, blowing past Wall Street expectations on the continued success of its 2003 hit "Finding Nemo".

The animation studio, posted net income of US$27.4 million, or 22 US cents per share, in the third quarter compared with a year-ago profit of US$22.4 million, or 19 US cents per share.

Revenue rose 3 percent to US$45.8 million from US$44.5 million a year ago.

Revenue in the quarter was driven by Pixar's library titles, with the 10th anniversary re-release of original hit "Toy Story" accounting for US$16 million, "Finding Nemo" bringing in US$13.7 million and "The Incredibles" posting US$11.8 million, chief financial officer Simon Bax said.

Bax said the company's quarterly earnings were higher than expected due to the strong contribution from "Nemo" and lower- than-anticipated international home video and television and tax expenses.

Analysts, on average, were expecting net earnings of 11 US cents per share and revenue of US$31 million, according to Reuters Estimates.

The Emeryville, California, studio forecast fourth-quarter earnings of 13 US cents to 17 US cents per share.

Pixar chief executive Steve Jobs said Walt Disney Co was its "first choice" for a new distribution pact for Pixar's computer generated, or CG, films. Disney and Pixar's current contract expires with the release of "Cars", and the two companies have been engaged in on-again, off-again negotiations for more than a year.

Jobs publicly feuded with former Disney CEO Michael Eisner, but has mended fences with new Disney CEO Robert Iger.

As usual, Jobs remained mum about the terms of an agreement or potential deal breakers, but said "we will know if we are going to continue our relationship with them by the end of the year".

"It's worth the few extra months of effort if there is a chance of continuing our relationship with Disney and our discussions right now are very productive," he told analysts on a conference call.

Sanders Morris Harris David Miller said Pixar, whose six films have all been box-office blockbusters, looks to double its take from its films after "Cars" because it can now demand a more lucrative distribution deal. It has shared with Disney income from the US$3.2 billion its films have grossed since 1995.

"Either way, Pixar wins," Miller said.

Jobs said he has not seen "Chicken Little", Disney's first in-house, all-CG animation feature, which opened last weekend at the top of the box office, beating expectations.

Disney's success is seen as giving it more leverage in talks with Pixar. Jobs said he planned to see the film in the coming week.

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