Analysts assess Activision results

Quartet of industry watchers tells investors that publisher could very well outpace its own guidance for record sales this year.

Yesterday evening, Activision announced its year-end results, delivering $1.51 billion in revenue and projecting a jump to $1.8 billion for its current fiscal year. However, it also posted a larger-than-expected loss for its fourth quarter of the fiscal year. While the market reacted negatively--Activision shares closed down $.92 to $18.87 this afternoon--analysts were largely bullish about the publisher.

Specifically, Pacific Crest Securities' Evan Wilson, Wedbush Morgan Securities' Michael Pachter, Lazard Capital Markets' Colin Sebastian, and Nollenberger Capital Partners' Todd Greenwald all distributed notes to investors advising that Activision could easily outperform its $1.8 billion projection.

Wilson specifically mentioned the Guitar Hero franchise as a reason to be optimistic, saying that franchise alone could provide $200 million in growth for the company. He explained his optimism by pointing to the wider array of games in the series hitting shelves this year, as well as its higher-than-average selling point and resistance to price cuts.

Pachter noted Activision's history of conservative forecasts (it originally projected $1 billion in revenue for last year instead of the $1.51 billion it reported yesterday) and said the publisher has a much stronger lineup of titles this year. For the current fiscal year, Pachter suggests that Activision could exceed its estimates by as much as $200 million, pushing revenue to the $2 billion point.

"The only major titles released last year that will not appear in this year's lineup are X-Men and Marvel Ultimate Alliance," Pachter wrote. "Instead, this year, the company has Spider-Man 3, Shrek the Third, Transformers and a 'new Marvel game' in its lineup."

Pachter's praise wasn't unqualified, however. His understanding is that Activision's next Call of Duty game is set partly in Iraq, an idea that worries him given the "widespread dissatisfaction with the US war effort in that country." Pachter also expressed concerns that the mixed reviews for Spider-Man 3 and competition in the music genre from the Harmonix-developed, Electronic Arts-marketed Rock Band could temper sales.

In his note, Greenwald also brought up the issue of EA competition, not for Activision's latest cash cow, but for one of its longest-running ones. He said that Tony Hawk should see competition for the first time in several years this holiday season when EA releases SKATE for next-generation systems.

32 Comments

  • shifty_saint

    Posted Jun 7, 2007 8:44 am PT

    Doing well, and im looking forward to the modern warfare concept!

  • tony2077ca

    Posted Jun 5, 2007 2:24 am PT

    i want to know what the marvel game is

  • UltraWoody

    Posted Jun 4, 2007 7:55 pm PT

    You people should be congratulating yourselves. If it weren't for the buyers like you and me, Activision would have nothing to show. Remember that you are the ones that makes all this possible. You can make or break a company.

  • rokkuman09

    Posted Jun 4, 2007 2:54 pm PT

    Cool. Good going for Activision. This goes to show if you make good games, then you will do well, and you will rake in the money..

  • jaredcrazy3232

    Posted Jun 4, 2007 2:23 pm PT

    BUY BUY BUY!!!!!.... man those buttons were cool.... the channel isnt a basic cable choice for me anymore

  • chrisdojo

    Posted Jun 4, 2007 8:53 am PT

    good news for activision.

  • Tenjikuronin

    Posted Jun 4, 2007 8:33 am PT

    LOL @ the picture of Jim Cramer on the article!

  • osxgp

    Posted Jun 3, 2007 11:05 pm PT

    EA won't be able to compete. I hope I'm wrong because competition makes for better games. I wish Madden had someone to compete with.

  • jpfondeur

    Posted Jun 3, 2007 5:34 pm PT

    I'm getting tired of seeing the word "Analyst" on "news" headlines.

  • FilthyYamBag

    Posted Jun 3, 2007 12:37 pm PT

    ohh the Cramer picture for this is perfect. stay with CRAAAAAA-MERRR. that aside go activision we need stronger companies in the industry

  • omegakie

    Posted Jun 3, 2007 12:09 pm PT

    That's a lot of MOOOOOOOOOOOOOOOOOONEY!!!!!

  • Wurz1515

    Posted Jun 3, 2007 11:47 am PT

    I like Tony hawk, though it's always the same it seems. Guitar Hero is the best thing they got going for them. Call of Duy 4 should be amazing as well. Spiderman 3 and Shrek 3 sucked and Transformers doesn't look too promising.

  • AceCometh

    Posted Jun 3, 2007 9:48 am PT

    I didn't contribute to those numbers. As fun as everyone says Guitar Hero 2 is, I'd rather play the real thing. Garth and Wayne, party on.

  • maxmax1234

    Posted Jun 3, 2007 3:40 am PT

    wow. i tributed to those numbers

  • vonboy

    Posted Jun 3, 2007 12:02 am PT

    well i never realy played or owned any skateboarding games, so i wouldn't realy mind any new ones.

  • ObiKKa

    Posted Jun 2, 2007 2:43 pm PT

    Same on Activision for the fact that they've released the very profitable, but utterly crap Spider-Man 3, & Shrek the Third games. They should have been better, but instead they've gotten worse than their previous instalments!

    Ooh, what's the name of avatar woman, aquaman?

  • Sw0rDMaN

    Posted Jun 2, 2007 2:25 pm PT

    Ewww Skate board games The last one that was actually fun was Tony Hawk underground 1

  • Sacred-Snow

    Posted Jun 2, 2007 6:44 am PT

    Can't Wait...

  • chaos_theory_09

    Posted Jun 2, 2007 5:54 am PT

    nice picture.

  • aquamah

    Posted Jun 2, 2007 5:07 am PT

    i want tenchu to PS3

  • aquamah

    Posted Jun 2, 2007 4:55 am PT

    activision... I WANT TENCHU FOR MY PS3... plez

  • RaiKageRyu

    Posted Jun 2, 2007 4:14 am PT

    oh crud, looks like EA is barging in of some of it's major territory.

  • Pete5506

    Posted Jun 1, 2007 10:03 pm PT

    I never cared much about the skateboard games

  • CookiesCream

    Posted Jun 1, 2007 9:47 pm PT

    skateboard games are the past...seriously

  • hector1313

    Posted Jun 1, 2007 6:08 pm PT

    I really think the skateboarding video game has been done and dusted... after TH2 it went downhill all the way... pun not intended.

    EA are late on the scene, the same as they were with Snowboarding.

    Cool Boarders 2... one of the best games I've ever played

  • Lonelynight

    Posted Jun 1, 2007 4:55 pm PT

    Don't really care.

  • comthitnuong

    Posted Jun 1, 2007 4:47 pm PT

    The Tony Hawk series has really lost it's flavor over the years. However, I don't think that SKATE will pose much of a threat to the series. I think the two will just coexist.

  • icym

    Posted Jun 1, 2007 3:51 pm PT

    Predict all you want, these guys opinion mean nothing. Betcha their prediction was PS3 domination in this current gen war and a continuing shrink for Nintendo's share of the market.

  • jacky531

    Posted Jun 1, 2007 3:44 pm PT

    The only game I'm waiting for is Transformers from activision because its graphics look AMAZING and I think pretty reall to but really hope the gameplay is good.

  • tankintheair315

    Posted Jun 1, 2007 3:34 pm PT

    meh never belelive an analyst

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