Jobs's stocks riding high
Apple and Pixar see their shares at record levels lately, to the benefit of Steve Jobs, the CEO of both companies.
Both companies are posting better-than-expected earnings, and both have seen their stocks trade at record levels of late. According to the latest Securities and Exchange Commission filings, Jobs doesn't draw a salary at Pixar or at Apple, but he holds an investment stake in the animation studio that makes him a billionaire, at least on paper.
Pixar's stock jumped at the open of trading today after the company reported earnings yesterday that far exceeded analysts' expectations.
The stock jumped 3.56, to close at 44.31, up nearly 9 percent from yesterday's close of 40.75.
While revenue and earnings were down from the year ago results, the company said its Toy Story franchise remained unexpectedly strong, driven primarily by Pixar's share of Toy Story merchandise royalties, television, and other revenues.
Revenues for the first quarter were $5 million compared with $7.9 million in the first quarter of 1997.
Net income for the first quarter was $3.8 million, or 8 cents a share, compared with $5.1 million or 11 cents per share in the first quarter of 1997. Analysts had expected the animation firm to report break-even results for the quarter, according to First Call.
This is the second quarter in a row that the company has beat the Street by 8 cents a share, and that has significantly driven up the stock price. Since the beginning of the year, the stock has appreciated about 100 percent from when it was trading in the low 20s.
This is good news for all shareholders, but especially for Jobs, who owns about 69 percent of the outstanding stock as of March 18, according to an SEC filing. At that time, there were 43,515,276 shares outstanding, which means Jobs owns about 30 million shares.
At yesterday's close of the markets, Jobs's stake in Pixar was valued at $1.22 billion, which is up from $1.03 billion a month ago. Jobs does not receive an annual salary for his service to Pixar.
He spends about two days per week at the computer animation company's offices. The rest of his time is being spent as interim chief executive of the company he cofounded in the 1970s, Apple Computer. He assumed that position on September last year.
Last week, Apple reported a second consecutive quarter of profits after reporting four quarters of losses. The company's revenues, however, have continued to slide. In the most recent quarter it reported revenue of $1.4 billion, compared to $1.7 billion a year earlier.
Apple stock, however, has appreciated about 100 percent since the beginning of the year, outpacing year-to-date gains for industry giants such as Compaq, Dell, IBM, and Hewlett-Packard.
Jobs did not receive any compensation for the services he performed for the company in fiscal year 1997, other than 30,000 stock options. Those options are valued at $830,625, based on yesterday's closing price of 27-11/16.
Both companies continue to face challenges despite their strong stock movement and better-than-expected quarterly results.
Since Jobs returned to Apple last year, he has brought the company to profitability with cost-cutting and a focus on high-margin products. Some analysts, however, are cautious about declaring a full-fledged turnaround until the company's sales grow steadily. A recent report said that Apple continues to lose its stronghold in the education market.
There have been other concerns over Jobs's position as "interim" CEO. One of Apple's directors said at the annual shareholder meeting that there no "active" search is under way for a permanent CEO, stating that Jobs was firmly in charge.
As for Academy Awarding-winning Pixar, there's no assurance that every one of its full-length animated films will be a box-office blockbuster. While Pixar has put a lot of challenges behind it by establishing a partnership with Disney, the real challenge is to deliver great films, said the company's CFO in an interview last month. If Pixar can't "pull that off," the company's revenue continue to fall.
Its revenue stream has been uneven, coming in bursts after the release of a successful feature film, then sinking after those revenues start to fade. So while, its Toy Story revenues have been stronger than expected, they still fell 37 percent from last year.
The company?s next feature film, called A Bug's Life, is expected to be released later this year. Toy Story 2, the sequel to the 1995 blockbuster, is scheduled for release during the 1999 holiday season.