After the close of the market today, Activision lowered its guidance for Q3 and Q4 of fiscal 2003, as well as the full fiscal years 2003 and 2004.
The new estimates reverse guidance that the company provided just seven weeks ago, on October 29. The company cited the following reasons for lower guidance:
Weaker than expected sales of the company's holiday game slate which featured a number of development properties in a season dominated by a few well-established brands.
Brand names are not performing as well as had been expected. While sales of its brands for the PS2 are doing well, Activision said its sales were lower than expected for the GameCube and Xbox.
Changes in retailer inventory management, in which retailers' orders are more conservative than in the past, in order to reduce the amount of product returns.
An "apparent shift in consumer demand" in which people are more frequently buying from well-established brands. In other words, Activision sees fewer titles accounting for a higher percentage of sales. The company reduced its fiscal year 2003 revenue guidance from $934 million to $823 million, and reduced its 2003 earnings per share guidance from $1.29 to $0.88. For 2004, the company expects revenues to stay flat, at $823 million, and projects its earnings per share to fall to $0.80. Shares of Activision were fell sharply on this news, down over 17% to $12.90 after the market close.
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