Despite the slide in profit, Pixar has plenty of film industry muscle

Despite the drop, earnings topped Wall Street estimates thanks to the success of Pixar's latest film The Incredibles.

Fourth-quarter net income was $55.2m (�30m), from $83.9m a year earlier when earnings were boosted by record DVD sales of fish film Finding Nemo.

Pixar also said it would wait to see who takes over as Disney's chief before agreeing a new distribution deal.

Buoyant

Shares of Pixar rose 1.5% in electronic trading after the close of US markets.

"The numbers are very good, obviously way ahead of what we had expected," said Rob Routh, an analyst at Jeffries & Co.

Steve Jobs, the founder of computer company Apple and chief executive of Pixar has clashed with Disney and its outgoing boss Michael Eisner over a new distribution deal.

The current partnership between the two firms will expire with the 9 June release of Pixar's seventh film, Cars.

(Mr Jobs) continues to show no love to the folks at Disney and Disney continues to take pot shots at Pixar David Miller, an analyst at Sanders Morris Harris

Pixar wants a bigger slice of the profit pie and has been negotiating hard in recent months.

Mr Jobs told investors that Pixar "likely...will not forge a new relationship with Disney beyond our current deal".

He added that Pixar would not help Disney to produce sequels to the very successful Monsters Inc and Finding Nemo films, nor would the firm allow its brand to be used in any marketing.

Mr Jobs said that Pixar would make more money developing projects it owned fully rather than developing sequels.

He also explained that Pixar will wait to see who replaces Mr Eisner at Disney.

Mr Jobs "just continues to show no love to the folks at Disney and Disney continues to take pot shots at Pixar," said David Miller, an analyst at Sanders Morris Harris.

Pixar said it expects earnings per share of between 85 cents and 95 cents during the current quarter, compared with 91 cents a share in past three month period.

However, chief financial officer Simon Bax said DVD revenues would be steady in the coming fiscal year.

In the fourth quarter, total sales at Pixar declined 34% to $108.9m.