World of Warcraft adds to Vivendi's coffers

VUG staffers can walk a little taller today. No longer the black hole that depletes the company's bottom line--the division has long operated in the red--Vivendi Universal Games came in for praise from VU CEO Jean-Bernard Levy, who presented the company's half-year earnings in Paris today.

Levy said that operating profit for the first half of 2005 was 1.99 billion euros ($2.46 billion), an increase of 34 percent compared with last year.

Vivendi stared out as a French water utility company, which, under the charismatic Jean-Marie Messier, evolved into the world's second-largest media conglomerate. It made history in 2002 when it tallied a $28.6 billion loss, the biggest in French corporate history.

Through a shedding of business units and continued paring of staff, the company has moved slowly toward profitability--sometimes in spite of the game division's losses. This year, however, the game division is contributing to the momentum.

"Little by little, Vivendi is freeing itself from this disastrous image," Laurent Vallee, a fund manager at Richelieu Finance in Paris, told the Associated Press.

In his opening statement, Levy said of the game division, "In this first half of 2005, I highlight the vitality of our businesses and the impressive series of sucesses...World of Warcraft, with four million players at end of August 2005, has been a worldwide success and enabled Vivendi Universal Games to return to profitability."

A year ago, the game unit lost 120 million euros ($147.4 million) in the company's second quarter. This year, the unit turned a profit of 2 million euros ($2.4 million). Sales for the game unit climbed 76 percent to 125 million euros ($153.5 million).

The only VU division to best the game group's sales surge was Universal Music Group, which saw its operating profit rise by nearly 90 percent to 106 million euros ($130 million).

Levy said the company was in line to beat its forecast for full fiscal-year earnings for 2005. "Through these investments and innovative projects, Vivendi Universal is assuring its future," Levy said in Paris.