Activision Posts Quarterly Loss, So-So Outlook

Major publisher and developer Activision announced its net revenues for the fiscal year ended March 31, 2006, posting a loss of $9.2 million in the fourth fiscal quarter. However, the company anticipates a slow transition back to better times, and pointed to the success of Call Of Duty 2 on Xbox 360, the platform's best-selling game so far, as a particular highlight for the quarter. The company had already previously reduced its outlook, citing the game console hardware transition plaguing many publishers, and thus had little extra bad news to tell investors, with Activision CEO Robert Kotick touting "better than expected results for the fourth quarter", and 14 consecutive years of revenue growth for the firm. During the fiscal year, Activision released several high profile titles based on established franchises such as Call of Duty, Doom, Quake, Shrek, Spider-Man, True Crime, X-Men, World Series of Poker, and Tony Hawk, and it reported that sales of games from the Tony Hawk franchise exceeded $1 billion over the games' lifetime. The company also added franchises such as Transformers to its list of titles to be released over the coming year. Activision's Q4 loss compared somewhat badly to a profit of $3.6 million a year earlier. Indeed, the company's net revenues during the fourth quarter amounted to $188.1 million, a decrease from the $203.9 million reported during the same period last year. The company projected a loss for the first quarter of fiscal 2007 as well, with net revenues totaling $145 million, but expected a limited, slow upturn from then on. For the total fiscal year of 2007, in fact, Activision expects net revenues of $1.025 billion and earnings per diluted share of $0.10, making fiscal 2007 the first year with year-on-year decreased revenues for the company in its history, thanks to the console transition. However, it expects this figure to climb sharply through 2008, when the company expects net revenues to exceed $1.6 billion. Finally, over fiscal 2006, Activision's European publishing net revenues grew 18 percent to more than $400 million. The company sells direct to retail in the seven largest European markets -- UK, France, Germany, Benelux, Nordic, Spain and Italy, and during the fiscal year added Austria. Kotick commented on the future: "Looking ahead, we will continue to leverage our assets -- the competitive leadership of our world-class franchises, production capabilities and worldwide distribution resources. Our leadership position will provide us with a competitive advantage in our continued efforts to provide superior returns to our shareholders. We are planning for and investing in the market growth that historically follows the introduction of new console hardware."