A STOCK'S LIFE; PIXAR'S SHARES HAVE TRADED WILDLY ON THE SUCCESS OF `TOY STORY' AND 3-YEAR WAIT FOR `A BUG'S LIFE'.

Byline: Dave McNary Daily News Staff Writer

Silicon Valley legend Steven P. Jobs has become the newest Hollywood mogul as the buzz over ``A Bug's Life'' turns out to be much more than just hype.

The much-anticipated tale of ants vs. grasshoppers, co-produced by entertainment giant The Walt Disney Co. and Jobs' Pixar Animation Studios, has performed at the high end of expectations during its 2-week-old life. Most analysts believe ``A Bug's Life,'' with around $70 million domestically after two weekends, will take in $175 million by the end of its run.

``The potential is still there for going past $200 million,'' said Prudential Securities analyst Kathy Styponias. ``It's a solid, solid movie and the buzz on it is building.''

``A Bug's Life,'' which set a record for Thanksgiving holiday performance despite serious competition from ``The Rugrats Movie,'' won't see a serious head-on challenge until Dec. 18 when DreamWorks SKG opens ``The Prince of Egypt.''

The performance means Pixar, originally created by George Lucas as part of his special-effects operations, will receive increased recognition for its ability to mix powerful computer technology with commercially viable stories.

``Pixar is not there yet, but they're on their way to people going to see their movies sight unseen, just because they're Pixar films,'' Styponias said.

Keith Benjamin, an analyst with BancBoston Robertson Stephens, has projected a $175 million domestic gross for ``Bug's'' and about the same figure for overseas box office. ``The numbers could be over $200 million but we won't change until we get more data over the next few weeks,'' he said. ``The foreign could also be $200 million.''

Analysts have emphasized that early response to ``A Bug's Life'' shows that Pixar can deliver on its promises and that its success with ``Toy Story'' was not a fluke. ``This gives us more confidence that the next Pixar film is going to be solid,'' Benjamin said.

Jobs, the co-creator of Apple Computer with Steve Wozniak, bought Pixar from Lucas in 1986 for $10 million and still owns more than two-thirds of the company. Pixar, based in Richmond in the San Francisco Bay Area, began receiving notice in 1988 when John Lasseter's ``Tin Toy'' won the Academy Award for Best Short Animated Film, then stunned Hollywood three years ago with the surprise success of ``Toy Story.''

The frenzy over ``Toy Story'' - the first feature-length, computer-animated film - and Jobs' reputation helped launch Pixar's $140 million initial public offering, in which shares jumped from $17 to $39 in the first day of trading.

Even though ``Toy Story'' took in $192 million domestically and $350 million worldwide, Wall Street's fever over Pixar subsequently cooled as investors came to three realizations:

Pixar's deal with Disney gave Pixar only one-tenth of the profits from a movie.

Pixar would not deliver another movie until this year.

Success in Hollywood is often elusive with yesterday's sure-thing blockbuster turning into today's flop in the face of fickle moviegoers.

During 1996, Pixar traded as low as $12 a share and it finished last year at $21 even though Jobs had negotiated a new five-picture, co-production deal with Disney that gave Pixar half the profits.

The issue rose steadily during early 1998 and began swinging wildly this summer as Disney launched a typically massive marketing push for ``A Bug's Life.'' Bullish investors drove the stock up to $64 in early July and pressure from short-sellers knocked it below $29 by the end of August.

Analysts are widely split on how to value Pixar, which has a market value of better than $2 billion. In recent weeks, Pixar has traded between $44 and $52, but was hit after Morgan Stanley analyst Dean Witter downgraded the stock to ``neutral'' from ``outperform.'' Last week, Styponias downgraded her rating to ``hold.''

But Benjamin said last week that he retains a $75 price target and Stewart Halpern of ING Barings Furman Selz reiterated his ``buy'' rating on Pixar with a 1999 target price of $60 as the Thanksgiving grosses came in well above his estimates. Halpern already has predicted that ``Toy Story 2,'' due out next November, can generate $150 million at the domestic box office.

Pixar also is developing a film tentatively called ``Hidden City'' for release in 2000.

And when those pictures come out, Pixar will get a much better share of the profit than it did with ``Toy Story.'' That's because of the new deal Jobs struck with Disney, which was willing to offer a sweeter deal because it is facing the biggest assault ever on its animation franchise.

The deal calls for the companies to split production costs, then gives Pixar an equal share of the profits after Disney has recouped its distribution costs. Merrill Lynch has estimated ``A Bug's Life,'' which cost an estimated $90 million to make and distribute, could generate more than $250 million in profits to Pixar from its cut of theatrical, video, merchandise and TV revenues.

``I think it's a huge feather in Jobs' cap that he could get that deal from Disney,'' Styponias said. ``Disney is extremely tough in extracting favorable terms in negotiations.''

Disney currently owns 2 percent of Pixar and rumors have emerged that it might buy the entire company from the 43-year-old Jobs, who also is running the resurgent Apple Computer as interim CEO. Styponias said that's unlikely, given Jobs' long-held interest in Pixar.

``The feedback I get is that he really enjoys it, that Pixar is fun and Apple is work,'' she said. ``He's kind of the center of the universe at Apple while he's not involved in day-to-day aspects of Pixar. My sense is he doesn't want to give it up.''

CAPTION(S):

2 Photos, Chart

Photo: (1--Color) no caption (``A Bug's Life'' character on pile of money)

Jon Gerung/Daily News

(2) In 1995, Disney and Pixar released ``Toy Story,'' the first feature-length computer-animated film.

Chart: WILD RIDE

Shares of Pixar Inc. have been very volatile since it went public in November 1995