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Pixar Animation Studios (PIXR) Message Board

  • jimillo9 jimillo9 Nov 26, 1999 1:18 PM Flag

    Pixar's Profit Potential

    I was just thinking about Pixar's profit
    potential, and took another
    look at the Katzenberg
    settlement.
    --------------
    According to Reuters:
    Katzenburg could receive as much as $250 million
    in
    bonuses based on a 2 percent participation in income from
    films, TV
    shows and merchandise sold during his 10
    years at Disney.
    --------------

    Katzenberg
    lawyers asked for $342M-$580M, but I think I remember the
    final settlement to be rumored in the $150M range.


    Let's do a little math:

    Pixar's take is 50% or
    25 times as much as Katzenberg's 2 percent.


    25 X $150M = 3.75 Billion

    $3.75 Billion
    divided by 10 years = $375
    Million Per Year


    Katzenberg's bonus was for income after he left Disney. This
    is the kind
    of income we should expect from
    Disney since Pixar's movies, on average,
    are doing
    as well as the movies under Katzenberg's tenure. And
    I would
    bet that the "Buzz Lightyear" TV show
    will be as successful in the
    television arena.
    After the 5-year deal with Disney is completed, the

    income will double.

    Some more math:


    $375M minus Taxes (40%) = $225M

    $225M divided
    by 50M shares = $4.50 a share

    After the
    current Disney contract is completed, this would be $9.00

    share. And remember, Katzenberg's money was mostly
    residual income after
    he left Disney. Pixar, on the
    other hand, has residual income plus
    movies in the
    pipeline.
    With three hits for three tries, why PIXR is
    valued under $100 per share
    is beyond my
    understanding. What does this company have to do to get

    respect on Wall Street?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • I am long Pixar and think it has a great future,
      but I don't think your numbers are neccessarily
      relevant.

      Katzenberg gets a bonus based on all the
      films he oversaw during his tenure, not just animated
      films. You are comparing the numbers on five Pixar films
      to (i would guess) well over a hundred films K
      oversaw during his tenure. Even using your settlement #
      of 150 million as the basis for K's 2% cut, that
      translates to 7.5 billion in gross. The five pixar films are
      not going to gross that much -- conservatively, lets
      say 3 billion. Then need to subtract costs and Disney
      cut of 50%.

      PIXAR is going to do great, but
      you are comparing their take to the bulk of the
      Disney studio output.

    • Pixarians,

      Since jimillo9 brought up one
      of our most beloved villains...Did anyone else think
      that Zurg might have been Pixar poking fun at
      Katzenberg? The stew is rich and thick.

      Someday, after
      the movie has made jillions of dinero, I want this
      board to discuss the movie's plot with more
      thoroughness. (We will enter that sleepy zone when all we have
      to do is count and calculate piles of revenue!) I
      think the movie is full of fun and interesting
      messages.

      Use the Wand of Power!

      Peace.

 

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