The Wall Street slogan, “When E.F. Hutton talks, everybody listens,” can more appropriately be applied to Pixar Animation Studios these days as its quarterly reports are among the most closely followed by the financial sector. This week, that attention is focused on a steep 66% dip in earnings for the company’s second fiscal quarter. The slump is being blamed on lower-than-expected Incredibles DVD sales, which forced the company to adjust its financial guidance last month.
For the quarter, Pixar reported revenues of $26.4 million, compared to $161.2 for Q1, and earnings of $12.7 million, down from $81.9 reported in May. Revenues for the six months ended July 2, 2005 stand at $187.7 million, with earnings at $94.6 million, or $0.77 per fully diluted share.
Despite the disappointing results, Pixar is waxing optimistic about its reputation and its future. “We’re very pleased with the overall performance of The Incredibles, which is by far the highest-selling DVD in 2005,” says CEO Steve Jobs. “Cars is almost completed and is looking fantastic, and we have no doubt that it will be one of our best films to date.”
The Incredibles’ failure to meet expectations is symptomatic of an industry-wide slump in DVD sales. DreamWorks experienced the same woes with Shrek 2, and other studios’ titles have been moving off shelves slower than in previous years.
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