Vivendi reports 20 percent drop in revenues

VU Games underperforms other divisions in recently reported earnings report; pins future hopes on Half-Life 2, World of Warcraft.

Today in Paris, Vivendi Universal, the once high-flying media conglomerate, reported its third-quarter financials. The top line saw the company take in 4.7 billion euros ($6.06 billion), 20 percent less in revenues than the same quarter a year ago. Today's earnings report does not address net loss or profit.

In a statement, the company said the drop in revenues for the July-September quarter was the result of "deconsolidating" its US-based entertainment businesses, including Universal Studios, which it sold to General Electric Co. subdivision NBC earlier in the year.

Readers of the fine print might enjoy the following statement that accompanied today's earnings report. According to Vivendi, "Comparable basis essentially illustrates the effect of the divestiture of Vivendi Universal Entertainment (VUE), of the divestitures at Canal+ Group (Telepiù, Canal+ Nordic, Canal+ Benelux, etc…), VUP (Comareg and Atica & Scipione) and of Vivendi Telecom Hungary, Kencell and Monaco Telecom, the abandonment of Internet operations and includes the full consolidation of Telecom Développement at SFR Cegetel Group and of Mauritel at Maroc Telecom as if these transactions had occurred at the beginning of 2003."

Disallowing the impact on revenues the above sales had, the company said revenue in the quarter actually rose 6 percent. Income from its telecommunications businesses and music operations were called out as substantial.

On the game front, the performance of Vivendi Universal Games during the quarter was bleak yet again. "Revenues of 63 million euros ($81.3 million) were down against the prior year by 18 percent (down 14 percent at constant currency)," the company said. The revenue decline was "due to a tough comparison against a very lucrative product slate in 2003." The company referred to Simpson’s: Hit & Run as well as the "strong performances" of Warcraft III Expansion and Homeworld 2 in Q3 2003.

Investors who are able to withstand the wobbliness of the third quarter could be rewarded handily, however. Two upcoming games in the VUG lineup could have a positive impact on the company's final fiscal year quarter: Half-Life 2 is due worldwide November 16; and one week later on November 23, World of Warcraft will release in the North American, Australian, and New Zealand markets.

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