As the father of two kids who are rather far apart in age I really appreciate when a movie company consistently produces films which the whole family from 3 to 46 can all thoroughly enjoy. It takes a special artistry to produce an animated movie with humor which works on levels which appeal both to little kids and to adults, and one of the great sources for that special sort of genius in the last few years has been Pixar Animation Studios. These are the folks who brought us Toy Story, Monsters Inc, Finding Nemo and The Incredibles - films our three year old, our teen and both parents have watched and enjoyed numerous times.
Like most sensible small investors one of the rules I follow is to put my money where my money is. In other words to invest in companies which produce the products which my family compulsively consumes. I needed to broaden my entertainment portfolio last Spring, so knowing that The Incredibles was due out on Video and that Pixar was now free from the Disney tether, I bought some stock.
As you may have heard, video and DVD sales of The Incredibles didn't do as well as expected, despite the inclusion of the short Jack-Jack Attack which may be the funniest thing I've ever watched on the small screen. Correspondingly, my Pixar stock dipped a little bit, but I hold stock for the long term like any sensible investor, and one weak season and short sales on a single product shouldn't damn a company. If one season's sales of one product was all they had to offer then you shouldn't have invested in the first place. So I didn't do anything rash like dump my stock at a loss.
Now here we are 7 or 8 months later and I get an impressive looking package from Milberg, Weiss, Bershad & Shulman LLP all about their suit Mataraza vs. Pixar, which is a class action suit of investors in Pixar against the company and several of its executives, including Steve Jobs, Edwin Catmull and Simon Bax. As someone who bought shares of Pixar during the critical period between the theatrical and video release of The Incredibles they want me to join their class action suit against the company.
You see, the film did quite well at the box office, but then didn't live up to the sales projections when it came out on video. Those projections were based largely on the success of Finding Nemo and good though The Incredibles was, it appealed to a slightly older demographic and didn't have the same broad appeal. As a result its sales were not at Nemo levels on video and DVD and the company didn't make as much money as expected. In addition, the suit alleges that they overhyped the film prior to release on video and DVD and produced too many units, leading to inflated appearing initial sales figures followed by substantial returns. The created an illusion of huge profits followed by a sudden discovery of a more modest real sales level. Apparently a lot of people bought to stock at an inflated price based on the anticipation of high sales, and then when the price dropped $8 (about 15%) a share in the end of June they sold at a loss.
Article comments
1 - Upright Simian
Hey, it's America. Everybody sues everybody over everything and nothing.
You know, you could join the suit, take the money from it and still keep your stock.
2 - vikk
I swear, it would never occur to me to sue over a loss made as a direct result of a decision I made. Today's culture is a strange, upside-down sort of thing.
3 - Jardon
I found this form to be somewhat poetic... I couldnt agree more with Mr. Nalle!
4 - El Bicho
Dave, very well-written, thorough piece. Even though I make my living videotaping depositions, this nonsense is really mindboggling and sad to see.
Maybe I can start a class action lawsuit against the organizers of the World Series of Poker, ESPN and all the sponsors. They made it look like anyone can win and I didn't even finish in the money. Who's with me?
Discussions between Jobs and the Eisner-less Disney regime are still ongoing. I have to believe that as bad as Disney animation has been lately that they will bend over backwards to appease Jobs and get them back in the fold.
5 - Dave Nalle
From what I can tell Disney is still distributing Pixar's films, so as long as that relationship remains intact I'm not sure what Disney has to offer Pixar, though Disney could certainly benefit a lot from their help with animation projects.
Dave
6 - Carolyn Mataraza
I resent that my name is used as the headline for your article and is listed at the top of the Googling my name-- and is inaccurate to boot. I was not the instigator of the suit and the law firm used me as an investor to establish the case. Apparently this occurred without my agreement after I faxed them information regarding my ownership of some shares. I only owned 35 shares of Pixar so how stupid is all this!
7 - Dave Nalle
Sorry about that, but you're the named plaintiff on all the briefs in the case. It is forever going to be known as Mataraza vs. Pixar. I hope that I made clear in the article that the real villains here are the lawyers, not the investors and certainly not you just for having your name attached to the suit.
It's ironic that you owned so few shares. I owned far more at the time, but I didn't choose to participate in the suit. My shares have now become a significantly larger number of Disney shares and have appreciated 49.2% since I bought them.
But I understand your concern and will do what I can. I'll see if I can get your name out of the title. It won't have much immediate effect, but it's all I can do. Aside from that, your best move for getting yourself off or at least down the google listing over this issue is to get a web page out there with your name featured more prominently and more frequently which talks about something more positive.
Dave