Activision Warns On Profits, Shares Drop

Despite the apparently positive reception to titles such as Call Of Duty 2 for Xbox 360, major game publisher Activision has released a statement indicating that it expects revenues and profits for the third and fourth quarter and full fiscal year 2006 to be lower than it has previously stated. According to the statement: "While a number of the company's products are outperforming the competition in the marketplace, overall the company's portfolio of products are not selling as well as had been anticipated. The company expects lower than anticipated reorders of its most profitable titles." Increased spending, partly on next-generation development, as well as additional consumer and trade spending, is likely to impact results further, as reportedly disappointing sales for titles such as Gun and Ultimate Spider-Man continue to affect the company. Activision also noted that, in the U.S., November sales were down 20% overall, and sales in the month of December are tracking below company expectations, and similar trends are being sighted in Europe, due to "accelerated shift in consumer demand away from current generation hardware and software due to the introduction of new hardware as well as declines in consumer spending." Although the company had a market share of 14% for November, second only to Electronic Arts, and had gained 54% over the previous year's results, its warning still took shares down $2.04, or almost 15%, to $12.26 in after-hours trading, showing a toll on game company stocks that is likely to continue at least until the next-gen transition is complete.