Shareholders have sued Pixar Animation Studios in two proposed class actions that claim the company misled investors with inflated projections for DVD sales of its hit title "The Incredibles."
(Reuters) -- Shareholders have sued Pixar Animation Studios in two proposed class actions that claim the company misled investors with inflated projections for DVD sales of its hit title "The Incredibles."
A Pixar spokesman described the lawsuits as "completely baseless" and said the company intends to defend itself "vigorously" against them.
Both lawsuits were filed in U.S. District Court in Northern California and purport to represent those who held Pixar shares between Jan. 18 and June 30, the day the company revised its earnings forecast downward to 10 cents per share from 15 cents to account for more potential DVD returns from retailers.
Higher reserves for returns led to a lower profit than expected. The company raised reserves based on information obtained from its distributor, the Walt Disney Co., CFO Simon Bax told analysts Aug. 4.
The company also said at that time that it was cooperating with a request for information from the U.S. Securities and Exchange Commission.
As of the June 30, Pixar has sold 27.1 million worldwide DVD and home video units of "The Incredibles." Chief Executive Steve Jobs told analysts in August that the company was ahead of its six-month profit forecast by 15 cents per share despite the lower quarterly profit.
Pixar's rival, DreamWorks Animation SKG Inc, also increased its reserves in May for returns of DVDs of "Shrek 2" and "Shark Tale," citing a tendency of retailers to remove product from store shelves sooner to make way for new titles.