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Activision revises figures upwards after earnings report

Activision announced its earnings for the first quarter of its 2006 fiscal year, ending June 30, reporting revenues of $241.1 million - a 14 per cent growth over the same period last year, but a gain which saw it enter a higher tax bracket.

Activision announced its earnings for the first quarter of its 2006 fiscal year, ending June 30, reporting revenues of $241.1 million - a 14 per cent growth over the same period last year, but one which was impacted by a higher rate of tax due to a one-time international tax benefit.

The earnings prompted Activision to increase its forecast for the full fiscal year earnings in 2006, with an estimated $1.47 billion in net revenues to come over the full year. The company would achieve the fourteenth consecutive year of revenue growth if it hits the estimated figure.

Three titles in particular - Fantastic 4, Doom 3 and Madagascar - were strong sellers, selling over a million copies each. However, the bottom line saw a loss of $3.6 million, partially attributed to costs around the European release of LucasArts' Star Wars Episode III: Revenge of the Sith, distributed by Activision in that territory.

Other factors which impacted the bottom line included reduced catalogue pricing, and a lower price for movie licensed title Madagascar compared to last year's Shrek 2 - which launched at a price point $10 higher than this year's game.

Activision is leaning towards a number of forthcoming titles to increase revenues, with Neversoft developed western Gun, Ultimate Spider-Man, X-Men Legends II: Rise of Apocalypse and World Series Poker driving the forefront.

During the announcement phone conference, executives declared new strategies to help limit the rising costs of the next generation platforms of Sony's PlayStation 3, Microsoft's Xbox 360 and Nintendo's Revolution, including "focusing more on big brands in our portfolio, developing more brands internally, aggressively exploiting brands across all platforms, and expanding our international sales and marketing capabilities."

The executives also expected operating expenses to be higher in fiscal 2006 compared to 2005, due to increased selling and marketing expenses. CEO Ron Doornink declared the company has increased development staff by 100, but expects to add another 200 to 300 studio staff, to accompany the purchase of Madagascar-developers Toys For Bob and development studio Beenox, both in May this year.

Doornink also expressed anticipation of a PlayStation 2 price drop in the U.S this autumn, potentially from its current price of around $200 to $129, either through "a list price reduction or promotional activity."

Updated: Changed to more accurately reflect a) the causes of the bottom line loss and b) the situation regarding the higher tax rate incurred during the quarter.

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Corey Brotherson

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