Higher Revenues For Activision, Option Investigation Continues

Major publisher Activision (Tony Hawk, Call Of Duty series) has announced that the company's revenues for the quarter ended September 30, 2006 were significantly higher than its outlook, though it did not release full results due to option grant investigations. Net revenues for the second quarter ended September 30, 2006 were $188.2 million, a 45% increase over the company's prior outlook of $130.0 million due to strong performance of the company's product portfolio, improving market conditions and the strength of the company's distribution and affiliate businesses. For the second quarter of last fiscal year, the company reported net revenues of $222.5 million. Activision announced that does not expect to be in a position to finalize other financial results for the second quarter until a committee has completed its internal review of the company's historical option grant practices. The SEC announced its own investigation into the allegations, which have affected many leading tech and game companies, back in July. The company is also increasing its net revenue outlook for Fiscal 2007 to $1.150 billion, as compared to its prior outlook of $1.075 billion, based on better-than-expected net revenue performance in the second quarter and an increase in the company's third quarter net revenue outlook for its distribution business. The company believes that the increase in its third quarter and full year net revenue outlook will be offset by higher legal expenses relating primarily to its internal review of historical stock option practices, including expenses relating to the previously announced informal SEC inquiry and derivative litigation, and the impact of the delayed release of Sony's PlayStation 3 system in Europe until March 2007. The company expects that the majority of the impact will occur in its fiscal third quarter. Activision also reaffirmed its fiscal year 2008 net revenue outlook which is expected to exceed $1.6 billion.