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Activision Announces First Quarter 2006 Results

Q1 Net Revenues Increase 14% - - To Date Three Games Ship More Than One Million Units - - Company Increases Financial Outlook For Fiscal 2006

SANTA MONICA, Calif., July 28, 2005: Activision, Inc. (Nasdaq: ATVI) today announced financial results for the first fiscal quarter ended June 30, 2005.

Net revenues were a record $241.1 million as compared to net revenues of $211.3 million reported for the first quarter last fiscal year. Net loss for the first fiscal quarter was $3.6 million, as compared with net income of $12.0 million for the previous first quarter. Loss per share was $0.02, as compared with $0.06 earnings per diluted share reported for the same period last year.

Robert A. Kotick, Chairman and CEO of Activision, stated, "Fiscal 2006 is off to a strong start. To date DOOM 3TM, MadagascarTM and Fantastic 4TM each have shipped in excess of one million units. During the quarter, we continued to strengthen our business. With $786 million in cash and short-term investments, one of the industry's strongest balance sheets and a strong product development slate, we have entered fiscal year 2006 with numerous competitive advantages."

Kotick continued, "We remain focused on our big propositions and intend to continue leveraging our increasing portfolio of franchises. Our production strategy centers around developing games based on proven, predictable brands. This strategy should enable us to grow our revenues, earnings and operating margin as we have over the past five years."

Business Highlights

Activision's results were driven by strong global consumer response to its new products across all platforms. During the quarter, the company released DOOM 3 for the Xbox® video game system, DOOM 3: Resurrection of EvilTM for the PC, Madagascar for the PlayStation® 2 computer entertainment system, Xbox video game system, Nintendo® GameCubeTM, PC, Nintendo Game Boy® AdvanceTM and Nintendo DS and Fantastic 4 for the PlayStation 2 computer entertainment system, Xbox video game system, Nintendo GameCube, PC and Nintendo Game Boy Advance. Additionally, Activision shipped LucasArts' Star Wars®: Episode III Revenge of the SithTM for the PlayStation 2 computer entertainment system and Xbox video game system in Europe.

Other highlights include:

  • According to NPD Funworld, DOOM® Collector's Edition was the #1 best-selling video game in the U.S. on the Xbox platform for the month of April. Additionally, Madagascar was the #1 best-selling children's title and the #2 selling game across all platforms for the month of June.
  • On May 3, 2005, Activision announced that it acquired game developer Toys For Bob. Activision has worked with Toys For Bob since 2002, most recently on Madagascar, which is based on DreamWorks Animation's feature film.
  • On May 25, Activision announced that it acquired game developer Beenox, Inc. The acquisition further bolsters Activision's internal development capabilities by providing it with a foothold in the Canadian province of Quebec, one of the fastest growing development talent pools in North America.
  • On June 9, Activision announced a strategic alliance with Harrah's Entertainment, Inc. to develop and publish video games based on the popular World Series of Poker Tournament.
  • On June 16, Activision named Michael Griffith as President and Chief Executive Officer of Activision Publishing, Inc. In his new role, Griffith will assume responsibility for Activision Publishing's operational management including its studio, publishing and corporate activities. A 24-year veteran of Procter & Gamble, Griffith brings an exceptionally well-balanced blend of management leadership and sales and marketing experience to Activision Publishing.
  • Activision previously reported that on July 11, 2003, the Securities and Exchange Commission commenced a non-public investigation entitled "In the Matter of Certain Video Game Manufacturers and Distributors". Activision recently was advised by the staff of the Securities and Exchange Commission that Activision is no longer a subject of this investigation and the matter is closed with regard to Activision.

Looking ahead to the second quarter, Activision's slate will be driven by the U.S. launches of Ultimate Spider-ManTM for the PlayStation 2 computer entertainment system, Xbox video game system, Nintendo GameCube, PC, Nintendo Game Boy Advance and Nintendo DS and X-Men Legends II: Rise of ApocalypseTM for the PlayStation 2 computer entertainment system, Xbox video game system, Nintendo GameCube and PC; and the worldwide launch of World Series of Poker® for the PlayStation 2 computer entertainment system, Xbox video game system, Nintendo GameCube and PSP. Additionally, the company will release Spider-Man 2TM the game and Tony Hawk's Underground 2 Remix in Europe timed to the launch of the PSP.

Company Outlook

Activision increased its financial outlook for fiscal 2006 to $1.47 billion in net revenues and earnings per diluted share of $0.69. For the second quarter of the fiscal year 2006, the company expects net revenues of $200 million and a loss per share of $0.10. For the third quarter, it expects net revenues of $790 million and earnings per diluted share of $0.69. For the fourth quarter, Activision expects net revenues of $240 million and earnings per diluted share of $0.09.

Conference Call

Today at 4:30 p.m. EDT, Activision's management will host a conference call and Webcast to discuss its fiscal 2006 first quarter results and outlook for the remainder of fiscal 2006. The company welcomes all members of the financial and media communities to visit the "Investor Relations" area of to listen to the conference call via a live Webcast or to listen to the call live by dialing into (719) 955-1564 in the U.S.

About Activision

Headquartered in Santa Monica, California, Activision, Inc. is a leading worldwide developer, publisher and distributor of interactive entertainment and leisure products. Founded in 1979, Activision posted net revenues of $1.4 billion for the fiscal year ended March 31, 2005.

Activision maintains operations in the U.S., Canada, the United Kingdom, France, Germany, Italy, Spain, Japan, Australia, Scandinavia and the Netherlands. More information about Activision and its products can be found on the company's World Wide Web site, which is located at

Note: The statements made in this press release that are not historical facts are "forward-looking" statements. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties. The company cautions readers of this press release that a number of important factors could cause Activision's actual future results to differ materially from those expressed in any such forward-looking statements.

Such factors include, without limitation, product delays, retail acceptance of our products, industry competition, rapid changes in technology and industry standards, protection of proprietary rights, maintenance of relationships with key personnel, vendors and third-party developers, international economic and political conditions, integration of recently acquired subsidiaries and identification of suitable future acquisition opportunities. These important factors and other factors that potentially could affect the company's financial results are described in our filings with the Securities and Exchange Commission, including the company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers of this press release are referred to such filings. The company may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in the company's assumptions or otherwise. The company undertakes no obligation to release publicly any revisions to its forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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