Ubisoft exceeds expectations, lowers guidance

The good news: Ubisoft ended the calendar year 2005 with a bang. The France-based publisher had a record-breaking third fiscal quarter ending December 31, 2005, in which it grossed 250 million euros ($305.7 million), a 35 percent year-on-year rise--above analyst's expectations. In a statement, the company singled out two titles as the keystones to its success: Prince of Persia The Two Thrones and (deep breath) Peter Jackson's King Kong: The Official Game of the Movie.

Yves Guillemot, Ubisoft's chief executive officer and raconteur-at-large, ladled out praise in a statement. Restating the obvious, he proclaimed that "2005 was another successful year ... With years of continuous progress behind us, we ranked third independent publisher in Europe in 2005 and fifth in North America. Ubisoft is now established as one of the major players in our industry with highly valuable assets." Ubisoft estimated it had a 4.5 percent market share in the US in 2005, compared with 3.5 percent in 2004.

But despite the Gallic executive's aplomb and Ubisoft's solid numbers, the company actually lowered its outlook for its current fiscal year. The company now anticipates revenues of approximately 130 million euros ($158.9 million) for the quarter ending March 31, 2006, and revenues close to 530 million euros ($648 million) for the year that ends on the same date. During the previous year, Ubi's net haul was 600 million euros ($733.6 million).

Ubisoft said the main reason for the lowered guidance was "The weakness of the video game software market in the U.S. and in Europe." Ironically, Ubisoft also pinned the blame on the same game that it praised for boosting its fiscal third-quarter earnings. "With four million units already in place, lower than initially anticipated reorders of Peter Jackson's King Kong: The Official Game of the Movie are expected for the fourth quarter," the company said in a statement. The film, which inspired the game, has also been below box office analysts' expectations.

The other big culprit behind Ubi's lowered guidance was the postponement of Splinter Cell Double Agent from the company's fiscal fourth quarter to September. The Tom Clancy-inspired multiplatform series has become a linchpin of the company's release calendar and the highly anticipated game's delay, which has series hero Sam Fisher going undercover in a crime syndicate, will severely impact the company's bottom line.

"Ubisoft is disappointed that our full year results should come below our initial guidance," the company said in a statement.