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PIXAR PROFITS 'INCREDIBLE' PARTNERNSHIP WITH DISNEY MAY BE RENEWED.

Byline: Greg Hernandez Staff Writer

Pixar Animation Studios, powered by mega-DVD sales of ``The Incredibles,'' announced first-quarter earnings that more than tripled from a year ago and the company also said it is still open to a possible new distribution deal with The Walt Disney Co.

``We're off to a terrific start with 'The Incredibles' shaping up to be the best-selling DVD of 2005,'' an upbeat Pixar CEO Steve Jobs said during a conference call with analysts.

Emeryville-based Pixar reported earnings of $81.9 million, or 67 cents per share, for the quarter ended April 2. That is dramatically up from the 2004 first-quarter when earnings were $26.7 million, or 23 cents per share. Revenue also tripled to $161.2 million from 53.8 million.

``Everything looks great,'' said media analyst Robert Routh of Jeffries & Co. Inc. ``They continue to under-promise and over-deliver.''

Home-video sales of ``The Incredibles'' contributed a whopping $127 million in revenue and is Pixar's second-highest grossing film after ``Finding Nemo.'' By the end of the first quarter, the title had sold 17.7 million units domestically, 97 percent of which were on DVD.

Pixar's next release, ``Cars,'' will be released in June 2006 instead of this November as Pixar shifts to a schedule that allows for a summer release in theaters to be followed by a winter holiday DVD release.

``We are on track to finish 'Cars' this October and it's looking terrific,'' Jobs said. ``We are now very far along in production. It's turning out to be even more stunning than we imagined.''

Jobs said Pixar plans to announce its next three films, beyond ``Cars,'' by the end of 2005 and also have the question of who the company's distribution partner going forward will be.

The partnership between Pixar and Disney has yielded the blockbusters ``The Incredibles,'' ``Finding Nemo,'' ``Monsters, Inc.,'' ``A Bug's Life,'' ``Toy Story'' and ``Toy Story 2.'' Pixar is responsible for the content of each film while Disney handles distribution and marketing.

But Jobs had clashed bitterly with outgoing Disney CEO Michael D. Eisner whom he publicly blamed when he broke off talks in January 2004 to extend the partnership. In contrast, Jobs referred to Eisner's successor, Bob Iger, as ``a terrific guy'' during Thursday's conference call.

With Eisner stepping down in September and Iger already having cordial talks with Jobs, a new deal could still be struck since the current contract does not expire until next year.

``I've had some good conversations with Bob Iger,'' Jobs said. ``As you know, we have not struck a deal with anybody else. We've been waiting to see what would happen at Disney. As Bob assumes control of the company, we'll probably find out pretty quickly whether there is some common ground or not.''

Pixar has felt that terms of the current distribution deal weighs too heavily in Disney's favor. The two companies split the profits from each film with Disney receiving 10 percent to 15 percent of the box office revenue as a distribution fee.

While the loss of new movies from Pixar would be a blow to Disney, the current contract also gives it the rights to develop and produce sequels to the movies produced under the current agreement, including direct-to-video projects and television.

Pixar Chief Financial Officer Simon Bax confirmed that Disney had approached Pixar about participating in sequels to ``Finding Nemo,'' ``Monsters, Inc.'' and ``A Bug's Life.''

``They certainly asked us if we wanted to actively participate in them if they were made and we declined,'' Bax said.

Pixar is ``well into production on our 2007 film'' that has not yet been announced and has at least four films in some stage of production and development, Jobs said.

Shares of Pixar stock closed at $46.27 on Nasdaq on Thursday but climbed 5 percent, to $48.60, in after-hours trading.

Greg Hernandez, (818) 713-3758

greg.hernandez(at)dailynews.com

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(color) ``The Incredibles,'' shaping up to be the best-selling DVD of 2005, has helped Pixar Animation to big first-quarter profits.

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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:May 6, 2005
Words:674
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