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Monday, 12 May 2008 06:36

Activision blows out Wall Street expectations

Written by David Stellmack







Rocks their world

Activision, Inc. announced its quarterly profit that far exceeded expectations, as demand for its Guitar Hero 3 and Call of Duty 4 video games (that were released at the end of last year) drove Activision to a profit, of slightly less than $55 million, or 17 cents per share. 

This number is more than triple the average expectation of 5 cents per share that has been circulating among Wall Street analysts. Activision revenue was $602.5 million, putting the company 93 percent over its revenue for the same period one year ago.

The results are the latest indicator that the video game industry is shrugging off worries about any effects the overall economy may have on this sector. Activision’s Chief Executive, Bobby Kotick said in a conference call, "The video game market fundamentals have never been stronger. There's no evidence that this growth will slow….” 

He went on, “A key focus this year will be Europe, where the company is trying to whip up the same excitement for the ‘Guitar Hero’ franchise that it enjoyed in the United States. Where we started seeing the market for 'Guitar Hero' explode in North America, we're probably a year behind in Europe," Kotick told Reuters news.

Activision’s forecasts predict that for its current Q1 it will have anticipated earnings of 13 cents per share based on revenue of $500 million. This forecast does not include results from France's Vivendi (the maker of the World of Warcraft video game) that has announced it is merging with Activision sometime during mid-2008. World of Warcraft is a subscription-based video game that is hugely popular and wildly financially successful.

Activision said it plans three new "Guitar Hero" titles in 2008, including one for Nintendo’s DS handheld device, an edition centered on the U.S. rock group, Aerosmith, and a surprise product in time for the holidays that may feature more instruments such as drums. 

Activision also indicated it is expected revenue and growth from upcoming film-based video games, including Kung Fu Panda and the new James Bond movie, Quantum of Solace.

Last modified on Monday, 12 May 2008 07:55

David Stellmack

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