Activision Posts Slight Quarterly Loss, Increases Outlook

Activision has released quarterly results for the first quarter of fiscal year 2006, a period ending June 30th, 2005. Net sales went up to a record $241.1 million, increasing 14 percent over the same period in fiscal year 2005. Net loss, on the other hand, was $3.6 million compared to a net profit of $12 million in the first quarter of FY 2005, slightly disappointing, but still above analyst estimates. The company had three million-sellers in the first quarter: Doom 3 for Xbox, Madagascar for multiple platforms, and Fantastic Four for multiple platforms all performed strongly in the start of the fiscal year. The company also shipped LucasArts' Star Wars: Episode III Revenge of the Sith PlayStation 2 and Xbox in Europe, and cited above-average marketing costs for this title as one of the reasons for the slight loss. "During the quarter, we continued to strengthen our business," said CEO Robert Kotick. "With $786 million in cash and short-term investments, one of the industry's strongest balance sheets and a strong product development slate, we have entered fiscal year 2006 with numerous competitive advantages." In the coming quarters, Activision is preparing games such as Ultimate Spider-Man and X-Men Legends II: Rise of Apocalypse for the second quarter. Additionally, its World Series of Poker game developed in partnership with Harrah's Casino is scheduled for release soon. The company also has big titles such as new Neversoft franchise Gun launching toward the end of the year. The company also announced that it was recently advised by the staff of the Securities and Exchange Commission that Activision is no longer a subject of a SEC investigation originally started in 2003. The SEC probe was into video game industry's accounting practices, and companies including THQ and Midway were also targeted for investigation at the time. "We remain focused on our big propositions and intend to continue leveraging our increasing portfolio of franchises," said Kotick. "Our production strategy centers around developing games based on proven, predictable brands. This strategy should enable us to grow our revenues, earnings and operating margin as we have over the past five years." The company has raised its outlook for the year to $1.47 billion in revenues and earnings per share of $0.69.