Though it faces stiff competition from Rock Band in the fall, for the moment, the Guitar Hero franchise is a money-minting machine. Massive sales of Guitar Hero II helped propel Activision into the earnings stratosphere during its first fiscal quarter, which saw the company's quarterly income soar 163 percent.
Activision's $495.5 million April-June net revenues bested those of archrival Electronic Arts by more than $100 million, earning it $27.8 million in net income ($0.09 earnings per share). By contrast, the Santa Monica-based publisher took in just $188.1 million during the same period in 2006, posting a net loss of $18.3 million.
Besides Guitar Hero II, which was the top-selling non-handheld and non-PC game for the quarter, Activision's other big titles for the quarter were the multiplatform film tie-ins Spider-Man 3 and Shrek the Third. Despite middling reviews, the former sold more than 876,000 units on all platforms in the US according to NPD, generating in excess of $38.7 million. The latter game also overcame critical scorn to sell more than 276,000 copies domestically during the quarter, generating a $10.3 million haul.
"During the quarter, we shipped more than 8 million units of new game releases worldwide," Activision chairman and CEO Bobby Kotick said in a statement. "For the first six months of the calendar year, Activision was the number one third-party US publisher on the console and handheld platforms."
As a result of its banner 2007 performance, Activision is raising its earnings guidance for its full fiscal year, which ends on March 31, 2008. The company now believes it will take in $1.87 billion in earnings, up from $1.8 billion. Before the end of the current calendar year, the company will ship Tony Hawk's Proving Ground, Guitar Hero III: Legends of Rock, Call of Duty 4: Modern Warfare, Spider-Man: Friend or Foe, and the Bee Movie Game.
For the July-August quarter, the company is forecasting $250 million in revenues for a net loss of $0.04 per share. So far, it has released the film tie-in Transformers: The Game and the expansion Guitar Hero Encore: Rocks the 80s, to mixed reviews. Much to the delight of shooter fans, the company also reconfirmed today that it plans to release the PC edition of Quake Wars during the July-September quarter. PlayStation 3 and Xbox 360 editions of the game are currently slated to arrive later in the year.
In after-hours trading, Activision's stock had risen $0.50 (2.73 percent) from its closing price to $18.80 per share.