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Activision Revenue Better Than Expected But Still Records Loss

by Rainier on Nov. 2, 2005 @ 1:41 p.m. PST

Activision today released its second fiscal quarter financial results, and although revenue was better than expected ($222.5 million, $22.5 million better than expected), it was still lower than last years $310.6 million, resulting in a net loss of $13.2 million, compared with a net income for the second fiscal quarter last year of $25.5 million. Seven of its recent titles sold over a million copies, and sales were driven mainly by Ulrimate Spider-Man and X-Men Legends II

Robert A. Kotick, Chairman and CEO of Activision, stated, "Our second quarter revenues and earnings exceeded our expectations, despite having difficult year-over-year comparables. To date, seven of our games have shipped more than one million units each. We remain focused on big propositions and in the third quarter will release the strongest holiday slate in our history. We are optimistic about our holiday titles, although we remain cautious of the many variables that can affect the holiday selling season and our own performance. As we look toward the future, we will continue to leverage our expanding portfolio of franchises and world class development capabilities to strengthen our global competitive position."

Kotick continued, "We are excited about the long-term opportunities that will result from the next-generation consoles and handheld platforms. These new platforms combined with the ever increasing installed base of current- generation console hardware and our strong portfolio of brands should enable us to continue to take advantage of the positive market fundamentals over the long-term."

Activision's second quarter results were driven by sales of Ultimate Spider-Man for the PS2, Xbox, Gamecube, GBA, NDS and PC; and X-Men Legends II: Rise of Apocalypse and World Series of Poker for the PS2, Xbox, Gamecube, PC, and PSP. The company also released Tony Hawk's Underground 2 Remix and Spider-Man 2 in conjunction with the European launch of the PSP hardware.

Other highlights include:

  • On September 12, 2005, Activision announced the appointment of Thomas Tippl as Chief Financial Officer and Director of Activision Publishing, Inc. A 14-year veteran of Procter & Gamble, Tippl has held leadership positions in investor relations, global treasury, financial and strategic planning, acquisitions and divestitures and financial management of business units in Asia, Europe and North America.
  • During the second quarter, Activision's Board of Directors approved a four-for-three split of its common shares. The split was announced on September 28, 2005 and was paid on October 24, 2005 to shareholders of record as of the close of business on October 10, 2005.

Activision's third quarter slate will be driven primarily by proven franchises which include Tony Hawk's American Wasteland for the PS2, Xbox, X360, Gamecube, GBA, NDS; Call of Duty 2 and Quake 4 for the PC and Xbox 360; Call of Duty 2: Big Red One and True Crime: New York City for the PS2, Xbox, Gamecube; and Shrek SuperSlam for the PS2, Xbox, Gamecube, GBA, NDS and PC. Additionally, the company will introduce two new intellectual properties GUN, from our internal studio Neversoft, which is being developed for the PS2, Xbox, GameCube, and the PC; and The Movies for the PC.

Kotick continued, "Our ability to release our largest holiday slate in the company's history -- eight big propositions -- prior to Thanksgiving is a testament to our extraordinarily talented employees' dedication, innovation, passion and commitment, as well as our organization's institutionalized product development processes which enable us to manage a large portfolio of global products while providing consistency with launch dates and product quality."

For the full fiscal year, Activision raised its net revenue outlook to $1.48 billion, and expects earnings per diluted share of $0.52.

The company reconfirmed its net revenue outlook for the third quarter and expects net revenues of $790 million and earnings per diluted share of $0.52. For the fourth quarter, Activision expects net revenues of $226 million and earnings per diluted share of $0.05.

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