Activision Shares Affected By Analyst Downgrade

Major game publisher and developer Activision saw investor confidence in its holiday game line-up dip as Bank of America Securities analyst Gary L. Cooper downgraded the stock to "Neutral" from "Buy", citing concerns over the company's game releases for the rest of the year, as well as into 2006. Specifically, Cooper suggests of Activision's game line-up and general market trends: "Given the subdued retail traffic ahead of the Xbox 360 launch, the average performance of Gun and the low ratings of True Crime: New York City we do not expect Activision to substantially beat its third quarter 2006 guidance." Neversoft-developed original IP Gun is one of Activision's marquee titles for this Christmas, and has jumped atop North American rental charts, showing some significant consumer interest, but its competent, not overwhelming critical reception has left analysts concerned over its longer-term retail performance. However, other titles such as Call of Duty 2 and Tony Hawk's American Wasteland may still do well for the company, and Cooper additionally suggested: "The company's third-quarter estimate is achievable, and there is likely to be upside", but, more damningly, suggested: "Activision is unlikely to grow its earnings in fiscal year 2007." This suggestion, although not empirically backed up, sent Activision shares down over a dollar to $15.18 in trading on Friday, despite this week's news of a long-term Activision and Marvel agreement to continue use of important licenses Spider-Man and X-Men.