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Wall Street punishes EA, Atari, absolves Activision

Two industry leaders take a whipping on bad earnings predictions while another is left alone.


One day after Electronic Arts released strong holiday earnings, Activision checked in with its own results for the quarter. The Tony Hawk publisher reported net revenue for the quarter ending December 31, 2003, of $508.5 million, or 34 percent more than Q4 2002. Net income rose to $77 million, a 74 percent quarter-on-quarter increase. Activision CEO Bobbie Kotick singled out Tony Hawk's Underground, True Crime: Streets of L.A., and Call of Duty as bright points. In a statement, he said the titles "were all top-five selling games for the holiday season and represent some of the highest quality, most innovative products that we have ever created."

Activision cited NPD Funworld figures that showed Tony Hawk's Underground and True Crime were the number two and number four best-selling titles across all platforms. Meanwhile, Call of Duty as the number one best-selling PC game in the U.S. for calendar Q4 and the fifth best-selling PC title of the entire year.

The company also adjusted its current-quarter revenue projections up from $114 to $125 million, a loss of two cents a share. Given that it will release Spider-Man 2 and Shrek 2 during the upcoming fiscal year, Activison now expects revenue to jump 10 percent to $1 billion. The good news did little to buoy Activision shares, which ended the day trading at an even $18, down just 4 cents.

Overall, however, game stocks tumbled today on Wall Street. Traders drove Atari shares lower by 91 cents, or 21 percent, to a close of $3.36. And Electronic Arts stock dropped $2.22 (4.6 percent) closing at $46.31. Both stocks are listed on NASDAQ.

Earlier this week, Atari reduced its most recent quarter and full-year earnings estimates. In a statement, the company said some of its titles came in for "underperforming consumer acceptance." It also announced news of a delay to the Driver 3 release. The game is now slated for a June release instead of its previously announced March date. The company adjusted its expected earnings for the quarter ending December 31, 2003, downward to $190 million. It had previously projected earnings of $215 million to $235 million. Atari will release final results for the holiday quarter on February 2.

While EA reported solid revenues and profit yesterday, it included in that news of revised, and reduced, projected revenues figures for the current quarter and upcoming full fiscal year.

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