Pixar's rodent problem - Money.CNN.com, 08/03/2005

Article from Money.CNN.com - 08/03/2005


Pixar's rodent problem

NEW YORK (CNN/Money) Up until very recently, Pixar Animation Studios enjoyed a stellar reputation with both moviegoers and investors.

That changed in late June when the company stunned Wall Street with an earnings warning due to lower than expected DVD sales of its latest movie, "The Incredibles."

Shares of Pixar (Research) plunged 14 percent the day after the warning and have yet to recover. So as the company gets set to officially announce its second-quarter results on Thursday, investors have to be wondering if this was a one-quarter blip or if Pixar's best days are behind it.
Currently, Pixar enjoys a sweet deal with Disney. The media giant pays for marketing and distribution of the films, and once Disney recovers those costs, Pixar shares equally in the profits of each film and related merchandise.

It's uncertain if Pixar would be able to negotiate as profitable a deal with another partner. Sony (Research), News Corp (Research). unit Twentieth Century Fox or Warner. Bros., which like CNN/Money is owned by Time Warner (Research), have been mentioned most often by analysts as likely partners if it doesn't make nice with Disney.
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