Activision’s Earnings Fall 30%

Video game publisher Activision Inc. said Monday that quarterly profit dropped 30% from a year earlier, and its shares fell 7% after its forecasts for the current quarter and its upcoming fiscal year came in below Wall Street expectations.

The Santa Monica company, whose offerings include “Quake 4” and the military action title “Call of Duty 2,” said fiscal third-quarter net income declined to $67.9 million, or 23 cents a share, from $97.3 million, or 35 cents, a year earlier. Revenue rose 20% to $816.2 million in the quarter ended Dec. 31 from $680.1 million.

Sales were above analysts’ average estimate of $708.2 million, but earnings fell short of their forecast of 34 cents a share, according to Reuters Estimates.

The company warned in December that its profit for the remainder of its fiscal year would miss its previous target as a shift to a new generation of game consoles and weak consumer spending slowed sales.

Sales were held back by a shortage of Xbox 360s and by consumers’ reluctance to buy games until Sony Corp. and Nintendo Co. introduce new consoles this year.

“Most interest has shifted to next-generation games, and the next-generation hardware isn’t fully into the market,” Wedbush Morgan Securities analyst Michael Pachter said.

Activision forecast fiscal fourth-quarter revenue of $125 million to $135 million and a loss of 7 cents to 9 cents a share.

For its fiscal year ending March 2007, Activision expects revenue of $1.41 billion to $1.42 billion and earnings of 9 cents to 11 cents a share.

For the fourth quarter, analysts had expected net income of 1 cent a share and revenue of $199.8 million. For fiscal 2007, they had expected net income of 45 cents a share and revenue of $1.47 billion.

Activision shares rose 28 cents to $14.36 in regular trading. The company released its earnings report after markets closed. Its shares fell to $13.30 after hours.

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Reuters and Bloomberg News were used in compiling this report.