Activision Posts Loss, Exudes Long-Term Optimism

Major U.S. video game publisher Activision today announced its financial results for the first quarter ended June 30, 2006, during which the company beat expectations but still posted a net loss of $18 million, up from the previous year's $3.6 million loss. The company posted net revenue of $188 million, down significantly from the $241 million reported in the same period the previous year. Activision's results for the quarter were driven by the multiplatform movie tie-ins Over the Hedge and X-Men: The Official Game. A key factor that contributed to the company's financial state for the period include its securing in April of the James Bond license, previously held by competitor Electronic Arts, through 2014. A month later, the Santa Monica-based company announced that it had purchased video game publisher RedOctane, Inc, the publisher of the riotously popular Guitar Hero franchise. Additionally, in June, Activision announced the opening of a new publishing office in Seoul, Korea, one of the fastest growing gaming markets in Asia, through the acquisition of CSR Entertainment's software distribution operations. Looking forward to the second quarter of fiscal 2007, Activision anticipates net revenues of $130 million and a loss per share of $0.13. in addition, the company has revised its expected net revenue outlook for the fiscal 2007 to be $1.075 billion. Lastly, Activision also reaffirmed its fiscal year 2008 outlook, during which it expects to see net revenues that exceed $1.6 billion. “Activision delivered better-than-expected results for the first quarter and our balance sheet remains one of the strongest in the industry,” noted Robert Kotick, Chairman and CEO of Activision. “We are excited about our strong launch lineup for the PlayStation 3 and Nintendo Wii, as well as our solid slate for the Xbox 360.” He added: “While there is still uncertainty with respect to the opportunities next-generation consoles will provide this fiscal year, we remain confident about the long-term industry prospects and our ability to realize superior returns for our shareholders.”