Pixar Faces Probe
Pixar
(PIXR)
, the Steve Jobs-run animation studio famous for delivering smash hits like
Finding Nemo
and
Toy Story
, reportedly is getting some attention from the
Securities and Exchange Commission
.
The SEC has launched an informal inquiry over the company's handling of the DVD release of
The Incredibles
, its latest blockbuster, and the retail returns that forced Pixar to
warn of a second-quarter earnings shortfall,
The Wall Street Journal
TheStreet Recommends
reported Friday, citing people familiar with the situation.
The news comes as rival
DreamWorks Animation
(DWA)
faces an SEC probe relating to sales and returns of
Shrek 2
. The SEC is looking into events surrounding DreamWorks' earnings debacles earlier this year.
In relaying the DVD return news to investors two months ago, Pixar cited the same home-video retail-return issues that seem to be plaguing Hollywood across the board.
Media analyst Marla Backer of Soleil Securities says that "the SEC would have been negligent had they not investigated the situation surrounding the Pixar DVD release" but adds that it would be wrong to compare the Pixar and DreamWorks situations. Still, Backer says we can expect the issue to overhang these stocks for some time.
Pixar last month warned that second-quarter earnings would miss targets thanks to faulty estimates on
The Incredibles
sales. Three weeks ago, the Emeryville, Calif., animation studio
reported earnings for the quarter, saying it made $12.7 million, or 10 cents a share, for the period ended July 2, down from the year-ago $37.4 million, or 32 cents a share. Revenue fell 60% from a year ago to $26.4 million, missing the Thomson First Call analyst consensus estimate by $5 million.
In trading Friday, Pixar shares were down 89 cents to $42.19.
