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Ubisoft Financial Result Reveals 'Splinter Cell Conviction' (ALL) Delay

by Rainier on July 24, 2007 @ 11:25 a.m. PDT

Ubisoft released its sales figures for Q1 ended June 30, 2007, reporting that sales came to $180.66M, up 90.5% compared with the same period last year, driven by Rainbow Six Vegas, Surf's Up, and its back catalog. Unfortunately, it also revealed that Splinter Cell Conviction has been delayed until January-March of 2008.

First-quarter sales for 2007-08 exceeded the forecast of approximately €120 million ($161.78 U.S.) announced when Ubisoft released its sales figures for fourth-quarter 2006-07. This performance was primarily attributed to the following:

o The continued success of Tom Clancy’s Rainbow Six Vegas on Xbox 360 as well as its launch on PLAYSTATION3 and PSP.
o The release of Surf’s Up, Prince of Persia, Oblivion and Call of Juarez.
o Back catalog games, which accounted for over one third of total sales for the period, particularly thanks to the Petz series and Teenage Mutant Ninja Turtles.

In first-quarter 2007-08, 79% of the Group's sales came from games for new-generation consoles, compared with 42% in the comparable prior-year period. This increase particularly reflects a sharp rise in sales of games for the PS3 (21% of sales) and the Nintendo DS (16%, versus 3% in the first-quarter 2006-07).

Yves Guillemot, CEO of Ubisoft stated "Ubisoft has made a solid start to the year, and continued to win market share. Momentum was particularly strong during the period for European sales, which climbed 109% thanks to the ramp-up of new-generation consoles and the impact of PS3 game sales, including Tom Clancy’s Rainbow Six Vegas and Oblivion. Our performance during this quarter has once again proved the relevance of our early positioning in the casual gaming sector, as demonstrated by the success of our DS and Wii games. Lastly, we were able to present one of the best game line-ups in the industry at this year’s E3, in terms of both quality and diversity. Assassin's Creed, Brothers in Arms, Haze, Tom Clancy's Splinter Cell Conviction and Tom Clancy's End War are some of the most highly anticipated games of the year. At the same time, our portfolio of upcoming casual games will enable us to strengthen and broaden our current offering, and to reach new consumers."

Ubisoft expects second-quarter 2007-08 sales to remain stable at approximately €105 million ($141.56 U.S.) .

The period will see the following main releases:

  • Tom Clancy’s Ghost Recon Advanced Warfighter 2 on PS3, PC and PSP.
  • The Settlers 6 for PC.
  • Jam Sessions on Nintendo DS.
  • The European launch of the game based on the animated movie Surf’s Up.

Future games releases

  • Far Cry 2: The multi-million selling brand will be back for the fourth fiscal quarter of 2007-08, as announced on July 19, 2007.
  • Tom Clancy’s Splinter Cell Conviction: originally scheduled for the third fiscal quarter of 2007-08, this game will now be released in the fourth fiscal quarter.

In light of our first-quarter performance, which exceeded forecasts, as well as the positive feedback for our games at this year's E3, Ubisoft has raised its performance targets for full-year 2007-08. The Group’s 2007-08 sales target is now approximately €825 million ($1,112.27 U.S.), and it expects current income before stock options to represent at least 9% of sales, compared with the previously-announced forecasts of €800 million ($1,078.56 U.S.) and at least 8% of sales.

In a separate press release, Ubisoft announced today that it will develop and publish the video game based on Twentieth Century Fox's "Avatar," the upcoming feature film written and directed by Academy Award-winning filmmaker James Cameron, whose previous films include "Titanic," "True Lies," "The Abyss," "Aliens," "The Terminator" and "Terminator 2: Judgment Day." The game is expected to release in conjunction with the movie's planned opening in May 2009.

On July 17, 2007, Ubisoft announced that it had sold its 18.89% stake in Gameloft (13,367,923 shares) to Calyon. At the same time, Ubisoft entered into an equity swap agreement with Calyon under which Calyon has 24 months to sell the shares on the market and any and all changes in the Gameloft share price will be recorded in full by Ubisoft. This transaction will only impact Ubisoft’s income statement and generate cash inflows when Calyon sells the Gameloft shares on the market.

As of July 24, 2007, Calyon had placed 4,167,923 Gameloft shares on the market at a price of €6.064 ($8.17 U.S.). This initial transaction led to a €25.3 million ($34.11 U.S.) cash inflow for Ubisoft. The Group will record a related net gain of €14.5 million ($19.55 U.S.) in its 2007-08 income statement under "gain/loss from operations of discontinued business segment", representing the difference between the share sale price of €6.064 ($8.17 U.S.) and the value of the Gameloft shares on Ubisoft’s balance sheet (€2.54 ($3.42 U.S.) per share at March 31, 2007), after deducting 1.65% in taxes.

Market share: In the first six calendar months of 2007, Ubisoft was the number 3 independent publisher in the United States with market share of 6% (compared with number 5 and 6% one year earlier); number 2 in Europe with 8.4% market share (compared with number 2 and 7.3%), number 2 in France with 7.9% market share (compared with number 2 and 7.3%); number 2 in the United Kingdom with 10% market share (compared with number 2 and 8.5%); and number 2 in Germany with 6.9% market share (compared with number 3 and 6.4%).

Strategic expansion of the casual games offering: Ubisoft has invested in the expansion of an internal development structure dedicated to the creation of Games for Everyone. Among the new team’s first projects are the launches of two new product lines – "My Coach" and "Imagine" – as well as the expansion of the already successful Petz franchise.

Creation of Tom Clancy’s EndWar, a new brand in the Tom Clancy series: Led by strategy veteran Michael de Plater, Tom Clancy’s EndWar is being developed by a world-class team at Ubisoft’s Shanghai studio whose members have experience working on Ubisoft’s hit franchises including Tom Clancy’s Ghost Recon, Tom Clancy’s Rainbow Six and Tom Clancy’s Splinter Cell.

Ubisoft to develop the video game based on the motion picture "Beowulf": Ubisoft, Paramount Pictures and Shangri-La Entertainment have announced a partnership to create video games based on “Beowulf”, the upcoming feature film from Robert Zemeckis, starring Angelina Jolie, Anthony Hopkins and John Malkovich. The movie is scheduled to open in late 2007.

Planned expansion of Ubisoft's Moroccan studio, with the aim of creating 150 new positions by 2010.

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