In a move that could threaten the position of beleaguered Disney CEO Michael Eisner, Apple CEO Steve Jobs' other company Pixar has ended its distribution agreement with Disney.

The Disney/Pixar distribution deal has been lucrative for both companies, with box-office hits including Finding Nemo and Toy Story massaging both firms' bottom-lines. Pixar has said it will now negotiate with other studios.

Bloomberg News reports that both Warner Bros and 20th Century Fox are interested in distributing Pixar's movies. Pixar will ship its next two movies through Disney under its existing agreement.

Under the terms of the existing agreement, Disney will retain the rights to distribute Pixar's first seven films, with Pixar continuing to receive its current share of the profits in perpetuity; and Disney will have the rights to solely finance and produce sequels to the films if Pixar declines to co-finance and produce them under the terms of the current agreement.

The move is a major blow to Eisner, who already faces calls for his resignation – most notably from Roy Disney. Pixar has generated as much as half Disney's annual movie profit. Pixar has helped boost Disney shares 43 per cent in the last 12 months.

"This is another example of Michael Eisner dropping the ball,'' said Thomas Wyman, a fund manager at Husic Capital Management in San Francisco. "I think they got a little too rough with Steve Jobs in negotiation."

Pixar CEO Steve Jobs said: "After ten months of trying to strike a deal with Disney, we're moving on. We've had a great run together – one of the most successful in Hollywood history – and it's a shame that Disney won't be participating in Pixar's future successes."

To date, Pixar's five films have earned more than $2.5 billion at the worldwide box office and sold over 150 million DVDs and videos. Pixar shares climbed 1.66 per cent on yesterday's trading, closing at $64.20.