Activision Q2 revenue slips 15 percent

Number-two publisher's revenue beats guidance, but falls year-on-year; SEC stock probe prevents final profit tally.


Call of Duty 3
Marvel: Ultimate Alliance
Tony Hawk's Downhill Jam

Last week, Electronic Arts surprised many pundits by reporting better than expected earnings for the July to September quarter. Today, its archrival Activision also reported its earnings, which were also better than expected. Net revenues for the quarter, the second of the publisher's 2007 fiscal year, were $188.2 million. The figure was a 45 percent increase over the estimate of $130.0 million Activision gave to investors in August.

That was the good news. The bad news was that Activision's earnings were $34.3 million below the $222.5 million the company pulled in during the second quarter of its 2006 fiscal year, a 15 percent decline. Net revenues for the six months ended September 30 were $376.2 million, which is $87.4 million down from the $463.6 million the company took during the same period the year prior.

"Our revenue over performance was driven by improving market conditions and the continued success of our franchises including Call of Duty, Guitar Hero, and World Series of Poker," Activision CEO Bobby Kotick told analysts at a postreport call. He also underlined the fact that the Xbox 360 Call of Duty 2 has sold more than 1 million copies in the US alone. That makes it the top title for the 360, which also generated $1 million for Activision via royalties from premium Xbox Live content--much of which was for Call of Duty 2.

However, what Kotick didn't tell analysts was what Activision's net income--aka profit--for July to September quarter was. That was because that, like several other publishers and tech companies, Activision is being investigated by the Securities and Exchange Commission for stock-option irregularities. The investigation was revealed to the public on July 31.

For the October to December quarter, Activision is now expecting revenues of approximately $600 million. The company is supporting the November 17 PlayStation 3 launch with three titles--Tony Hawk's Project 8, Call of Duty 3, and Marvel: Ultimate Alliance--and the November 19 Wii launch with five: Tony Hawk's Downhill Jam, Call of Duty 3, Marvel: Ultimate Alliance, Rapala Tournament Fishing, and World Series of Poker: Tournament of Champions. Tony Hawk's Project 8 and COD3 are also set to ship for the Xbox 360 and current-generation consoles.

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