Updated from 4:21 p.m.

Disney

(DIS) - Get Report

shares slumped after a brief news halt raised and then quickly dashed Wall Street's hopes of a

Pixar

( PIXR) reconciliation.

The big media posted a strong second quarter Wednesday, handily beating earnings and revenue targets on a 65% profit gain at its studio unit.

But the earnings release, strong as it was, couldn't dispel a bit of disappointment among investors. Speculation arose when Disney shares were halted at midafternoon that the company was ready to announce an important transaction of some sort -- perhaps the long-rumored sale of ABC Radio or, more fancifully, a renewal of the lucrative but rocky Pixar distribution deal.

Pixar's Steve Jobs hasn't been a big fan of outgoing Disney chief Michael Eisner, and investors have been hoping Disney and Pixar could patch things up with Bob Iger due to take the reins at Disney this fall.

But Disney offered no further update on that situation Wednesday afternoon, posting only the second-quarter earnings release. A spokeswoman cited an internal company error and indicated that as a precaution, trading was halted until the earnings release could be sent out in a uniform way. The numbers hadn't been due for another hour and a half.

For the quarter ended April 2, Disney made $698 million, or 33 cents a diluted share. That's up from the year-ago 26 cents a share and a penny ahead of the Thomson First Call analyst estimate.

Revenue jumped 9% from a year ago to $7.83 billion, in line with what Wall Street expected.

"It is very gratifying to see our company continue to achieve impressive growth," said Eisner. "The second quarter's strong results are the latest demonstration that, across the company, our management team continues to effectively execute on its strategic plans. As we anticipated, last year's tremendous momentum has continued into 2005, bringing us well on the way toward another year of double-digit earnings growth for our shareholders."

The news came after Disney shares were halted for 25 minutes just after 2:30 p.m. EDT, according to Nasdaqtrader.com.

In a tag-team earnings call presentation after the close, Eisner and Iger focused on Disney's commitment to creativity while emphasizing the company's Asian expansion. They also discussed opportunities in the gaming industry and with wireless platfroms.

During the Pixar earnings call last week, Jobs said that while he's had conversations with Iger, the two sides were not yet in negotiations. He also implied that he would be courting other suitors in the near future. Jobs expects to have a deal done by the end of the year, but there's no immediate pressure on Pixar to do so since the Disney distribution agreement will see the company through its next release

Cars

, due out more than a year from now.

The possible sale of ABC Radio is viewed as a more immediate Iger move come Eisner's departure. Traditional radio is feeling more pressure from up-and-coming satellite providers

Sirius

(SIRI) - Get Report

and

XM

( XMSR). Any deal would come on the heels of other recent media disassembly plays at

Clear Channel

Communications

(CCU) - Get Report

,

Viacom

(VIA) - Get Report

and

Emmis Communications

(EMMS) - Get Report

, which yesterday announced plans to sell 16 broadcast television stations, valued at $1 billion. A similar valuation is expected for ABC Radio.

Asked about the possibility of selling radio assets, Iger said, "We've been in radio for a long time -- it is extremely well-managed. As we've said in the past, we're always open to the possibility of buying or selling

assets with an eye to improving shareholder value." He said the process of looking at assets was an ongoing process but wouldn't comment further on any specific division.

The report comes after Disney was recently sued over its CEO selection process by dissident ex-directors. On Wednesday, Iger said of the suit, "We believe it is without basis and have turned it over to legal people for handling." Iger said he will not be deterred from achieving company goals and added that people around the company want the rhetoric to end. He said people "are plain fed up with it."

Also, in the last week, Pixar and rival animation studio

DreamWorks

(DWA)

reported widely diverging quarterly results.

Disney shares were up 26 cents at $27.21 Wednesday before the halt, but they dropped 28 cents to $26.67 afterward.