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Pixar goes public, soars

RICHMOND, Calif., Nov. 29 -- Stock of Pixar Animation Studios, the computer-animation company that created the special effects for 'Toy Story,' soared 77 percent Wednesday following completion of its $132 million stock offering at $22 a share. Pixar, trading under the symbol PIXR, closed at $39 a share in heavy Nasdaq trading after reaching as high as $49.50. More than 11.67 shares changed hands. The offering puts about 20 percent of Pixar's shares in public hands. At the current stock price, Pixar has a market capitalization of $1.2 billion. Steven Jobs, co-founder of Apple Computer, owns the remaining 80 percent of Pixar. He bought the company from film director George Lucas in 1986 and has invested $60 million in the company. The original offering had a target price of $12 to $14 a share, so the initial public offering price indicated strong demand for the issue. It was one of the hottest new high-tech issues this year. Internet software specialist Netscape Communications more than doubled its $28 IPO price on Aug. 9 by trading up to $58.25 a share and closed Wednesday with a $9 gain to $140 -- five times the IPO price. Netscape initially intended to offer 3 million shares priced between $12 and $14, then upped its offering to 5 million shares at $28. That made it the first offering in history to double in price before hitting the market. Pixar co-produced 'Toy Story' with Walt Disney Co. and the film dominated the U.S. box office during a record-setting holiday weekend at the nation's box office with $39.1 million at 2,457 theaters from Wednesday to Sunday for the year's second-largest debut.

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Analysts believe Disney will receive 80 to 90 percent of the revenues after exhibitors take their cut. Pixar said in its prospectus that its compensation would be very small compared to Disney's even if its movies were 'extraordinary box office successes.' Such documents usually take the most negative possible view of a company's outlook. 'Toy Story' will likely wind up with more than $150 million in domestic revenues. Pixar, which has about 100 employees, is committed to produce its next two movies for Disney, which has agreed to release a second film. Some analysts have urged caution over the new issue since Pixar's next film, 'Bugs,' will not be out until 1998. Disney is also believed to be working on a separate computer-animated film expected out the same year and several other studios, including start-up Dreamworks SKG, 20th Century Fox, Warner Bros., Turner Broadcasting System, are also involved in animated projects. Pixar earned $3.1 million, or 8 cents a share, on revenues of $10.6 million during the first nine months of this year. It has also produced television commercials and short films using its animation technology. Pixar, of Richmond, Calif., faces competition in its graphics and animation software sales with Microsoft Corp. and Silicon Graphics Inc. More than 60 percent of its revenues during the first nine months of this year came from a licensing deal with Microsoft.

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