Activision sales nearly double
Activision Inc.’s revenue shot to the top of the charts in its fourth quarter, driven by the steady drumbeat of sales of its “Guitar Hero” video game franchise, the Santa Monica company said Thursday.
Sales nearly doubled to $602.5 million in the quarter that ended March 31, up from $312.5 million in the year-earlier period and far exceeding the company’s forecast of $365 million. Activision swung to a profit, earning $44.2 million, or 14 cents a share, compared with a loss of $14.4 million, or 5 cents, a year earlier.
The performance caught some on Wall Street by surprise, particularly since the quarter is traditionally slow for the industry and because Activision didn’t release any new games during the three months. Analysts polled by Thomson Financial had expected $357 million in revenue and $14 million in net income.
Activision’s stock ticked up 21 cents to $27.70 and jumped an additional $1.20, or 4.3%, to $28.90 in after-hours trading after the earnings release.
“It was a blowout quarter,” said Colin Sebastian, an analyst with Lazard Capital Markets in New York. “And they did it without releasing any new games. It’s obviously the strength of the industry, as well as the quality of their lineup. There are clearly a lot of dollars flowing into this industry, despite the economic head winds.”
The market for games and consoles to play them on hit $46.4 billion worldwide last year, according to research firm IDC, which estimated sales would grow 23% to $57.1 billion this year.
“The video game [industry’s] fundamentals have never been stronger,” Activision Chief Executive Robert Kotick said in a conference call with analysts, noting a 32% gain in game sales in the first three months of this year compared with the same period in 2007 despite curbed consumer spending. “A lot of this growth is coming from consumers who are experiencing video games for the first time.”
That optimism, along with a bigger slate of titles for the coming year, led Activision to project earnings of 72 cents a share on $2.75 billion in sales. The estimates don’t include any financial projections for Vivendi Games, whose combination with Activision is expected to be completed this summer, creating one of the world’s largest video game publishers.
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