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Guitar Hero III

Platform(s): PC, PlayStation 2, PlayStation 3, Wii, Xbox 360
Genre: Rhythm
Publisher: Red Octane / Activision
Developer: Neversoft
Release Date: Oct. 28, 2007 (US), Nov. 23, 2007 (EU)

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PC gamer, WorthPlaying EIC, globe-trotting couch potato, patriot, '80s headbanger, movie watcher, music lover, foodie and man in black -- squirrel!

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Activision Financial Result Reveals 'Guitar Hero III' Rocks, New Titles

by Rainier on Nov. 5, 2007 @ 2:59 p.m. PST

Guitar Hero fans will channel their inner rock god using Gibson Guitar's Les Paul and Kramer models, experience new features and explosive content including a new multiplayer action-inspired battle mode, grueling boss battles, a bevy of exclusive unlockable content and authentic rock venues.

Net revenues for the second quarter were a record $317.7 million, a 69% increase, as compared to net revenues of $188.2 million reported for the same quarter last fiscal year. Net income for the second fiscal quarter was $0.7 million, or break-even earnings per share, as compared to a net loss of $24.3 million, or a loss per share of $0.09 reported for the second quarter of last fiscal year. Excluding the impact of expenses related to equity-based compensation, the company had net income of $4.9 million and earnings per diluted share of $0.02 for the second quarter. This compares to a net loss of $21.3 million and a loss per share of $0.08, excluding the impact of expenses related to equity-based compensation for the second quarter of last fiscal year.

Net revenues for the six-month period ended September 30, 2007 were $813.2 million, as compared to net revenues of $376.2 million reported for the six-month period of last fiscal year. Net income for the first six months was $28.5 million, or earnings per diluted share of $0.09, as compared with a net loss of $42.6 million, or a loss per share of $0.15, reported for the same period last fiscal year. Excluding the impact of expenses related to equity-based compensation, the company had net income of $37.7 million and earnings per diluted share of $0.12 for the first six months of fiscal 2008. This compares to a net loss of $36.1 million and a loss per share of $0.13, excluding the impact of expenses related to equity-based compensation for the six-month period of last fiscal year.

Robert Kotick, Chairman and CEO of Activision, stated, "Our second quarter net revenues were the highest in our company's history and we ended the quarter with $962 million in cash and short-term investments. We significantly strengthened our development capabilities through our acquisition of Bizarre Creations, a proven top-tier developer of racing games which will facilitate our entry into this important segment."

Kotick continued, "During Q3, we shipped more units of our internally developed, wholly owned franchise, Guitar Hero III(R): Legends of Rock, than any other game in Activision's history. Within the first seven days, consumer sell through was more than $100 million in North America alone -- our largest product launch ever. Our third-quarter slate is expected to deliver our strongest quarterly results to date, with forecasted net revenues in excess of $1 billion. The eagerly anticipated Call of Duty 4: Modern Warfare will launch tomorrow, and all of our holiday titles in North America will be in retail distribution by mid-week. We are continuing to leverage our strong portfolio of franchises across key geographies and gaming platforms. As a result of our strong performance in the first six months of the fiscal year, and our solid third quarter release slate, we are raising our fiscal year 2008 net revenues and earnings outlook."

During the second quarter, Activision released three titles -- one title worldwide, Guitar Hero Encore: Rocks the 80s on the PS2, and two titles in Europe -- Transformers: The Game on the Xbox 360 video game and entertainment system from Microsoft, PS3, Wii home video game system from Nintendo, PlayStation 2 computer entertainment system, PC, and the Nintendo DS; and the online multiplayer game Enemy Territory: Quake Wars on the PC.

Other quarterly business highlights are as follows:

  • The Guitar Hero franchise is the #1 best-selling franchise in the U.S. for the calendar year, and the #3 franchise in the U.S. for the quarter, according to The NPD Group.
  • For the quarter, in Europe, Transformers: The Game was the #2 third-party title on all platforms, according to Charttrack and Gfk, and in the U.S., it ranked as a top-10 best-selling console and handheld title, according to The NPD Group. Worldwide, Transformers was also #1 third-party handheld title for the quarter, including the #1 best-selling game for the Nintendo DS and the PSP system, according to The NPD Group, Charttrack and Gfk.
  • On September 26, 2007, Activision announced that it had acquired U.K.-based developer Bizarre Creations, one of the world's premier video game developers and a leader in the racing category. The acquisition will enable Activision to enter the $1.4 billion racing category, which is the fourth most popular videogame genre and represents more than 10% of the total video game market worldwide.
  • For the quarter, Activision's international publishing net revenues grew 80% over the prior year, and for the first six months of the fiscal year were up 145% as compared to the same period for last fiscal year.
  • In the U.S., for the second quarter, Activision doubled its console and hand-held market share from 5% to 10% year over year, according to The NPD Group.

For the third quarter, Activision has already shipped Bee Movie Game in connection with DreamWorks Animation's theatrical release; Enemy Territory: Quake Wars in North America; Guitar Hero(R) III: Legends of Rock; Spider-Man: Friend or Foe; and Tony Hawk's Proving Ground. Activision's Call of Duty 4: Modern Warfare will be released worldwide on November 6, 2007.

Today, Activision increased its fiscal year 2008 net revenues and earnings per share outlook. For the full fiscal year, the company expects net revenues of $2.07 billion and earnings per diluted share of $0.55. Excluding the impact of equity-based compensation expense, the company expects earnings per diluted share of $0.65 for the full fiscal year.

For the back half of the fiscal year, Activision expects that the acquisition of Bizarre Creations will be dilutive by approximately $0.02 - $0.03 per share and this has been incorporated into the above fiscal year outlook. For the third quarter, the company expects net revenues of $1.05 billion and earnings per diluted share of $0.51. Excluding the impact of equity-based compensation expense, the company expects earnings per diluted share of $0.55 for the third quarter.


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