Activision’s Earnings Soar as Sales Surge
Powered by hits like “Spider-Man 2” and “Shrek 2,” video game publisher Activision Inc. said Wednesday that its fiscal first-quarter profit nearly tripled as sales hit a non-holiday high.
Net income rose to $11.9 million, or 8 cents a share, from $4.2 million, or 3 cents, a year earlier. Sales grew 33% to $211.3 million from $158.7 million.
Activision Chairman Robert Kotick said the success of movie-inspired games was “a sign of the collaboration between the studios and our brand management working exceptionally well.”
The Santa Monica-based company did not disclose sales numbers for specific titles, but analyst Michael Pachter of Wedbush Morgan Securities in Los Angeles estimated that nearly half the quarter’s revenue came from “Shrek” and “Spider-Man.”
“That’s not unusual,” he said. “This is a hit-driven business.”
Pachter said Activision excelled at developing sequels and games based on existing properties. Activision executives said new versions of “Spider-Man” and “Shrek” games were planned for 2005.
Next month, Activision is scheduled to release “Doom 3” -- the latest in a hugely successful series that debuted in 1993. Pachter said Activision’s sales forecast for the current quarter of $254 million was too cautious.
“I think this management feels that it’s to the company’s benefit if they promise low and deliver high,” he said. But he said investors might not take kindly to that. “We like optimism. We don’t like conservatism.”
Activision shares fell 89 cents to $14.91 on Nasdaq. In after-hours trading, following the earnings announcement, the stock dropped further to $14.50.
