Activision Releases Q3 Fiscal Expectations; Ups Nintendo Consoles Support

Just when we got done talking about a violently-mature turn for Nintendo (Pink Sheets: NTDOY) with the pending release of Take 2 (NASDAQ: TTWO) subsidiary Rockstar Games' Manhunt 2, another Sony-esque third-party title makes the jump to Wii and/or DS for a future release.

Activision, Inc. (NASDAQ: ATVI) announced this week that in addition to expecting a possible record profit in Q3 for fiscal 2007, a conference call initiated by the company revealed increasing support for Nintendo hardware platforms.

For fiscal 2007 Q3, Activision was the #2 third-party publisher for videogames released on consoles and handheld devices. Additionally, the company expects net revenues of $822.8 million, an increase of $6.6 million as compared to net revenues of $816.2 million previously reported for the third quarter of fiscal 2006. Net income for the fiscal third quarter is expected to rise to $124.8 million, an 84% increase compared with net income of $67.9 million previously reported for the previous-year fiscal third quarter. Earnings per diluted share for the quarter are expected to be $0.41, as compared with earnings per diluted share previously reported for the prior-year fiscal third quarter of $0.23. Excluding the impact of equity-based compensation, the company expects to report earnings per diluted share of $0.42 for the fiscal third quarter. Net Revenue Outlook figures were also raised to $1.40 Billion for fiscal 2007 as a whole.

"Net revenues for Activision's third quarter of fiscal 2007 are expected to be the highest in the company's history", commented Activision Chairman and CEO Robert Kotick. "For the month of November, Activision was the #1 U.S. console and handheld publisher and the #2 publisher for the fiscal third quarter. We achieved these results with a smaller, focused slate that was anchored by four key titles - Call of Duty® 3, Marvel™: Ultimate Alliance™, Tony Hawk's Project 8™ and Guitar Hero II™ and strong execution by our global sales and marketing teams."

"During the quarter, we grew both the Call of Duty and Tony Hawk franchises and established two new franchises, Marvel: Ultimate Alliance and Guitar Hero," Kotick continued. "Strong launches for both PLAYSTATION® 3 in the U.S. and the Wii™ in the U.S. and Europe, as well as continued consumer adoption of the Xbox 360™ worldwide, suggests a great deal of momentum for next-generation videogame system adoption in the coming years. As we look toward the future, we remain excited about the improving market conditions for our industry. The combination of our product slate, the opportunities created by next-generation console systems, the increasing installed base of current-generation console hardware, continued growth in handhelds, as well as higher barriers to entry for new and existingcompetitors, positions us well to expand our net revenues, earnings and operating margins in the future."

Activision's fiscal third quarter results were driven by solid performance of its titles across all platforms worldwide. During the fiscal third quarter, Activision was the only publisher that had four of the top 11 best-selling games in the U.S., according to The NPD Group - Guitar Hero II, Call of Duty 3, Marvel: Ultimate Alliance and Tony Hawk's Project 8. Additionally, between October and December, Activision released three launch titles for the PLAYSTATION 3 -- Call of Duty 3, Marvel™: Ultimate Alliance and Tony Hawk's Project 8, and five launch titles for the Wii -- Call of Duty 3, Marvel: Ultimate Alliance, Rapala Tournament Fishing, Tony Hawk's Downhill Jam and World Series of Poker: Tournament of Champions.

Activision also announced that it's support for Wii and DS, which adds to the efforts of Electronic Arts, Inc. (NASDAQ: ERTS) in starting to more "aggressively target the Nintendo platforms" will increase, with the company focusing on "our most successful franchises-Call of Duty, Tony Hawk, and Guitar Hero" through the end of fiscal 2008. The company also reaffirmed its fiscal 2008 net revenue outlook which is expected to exceed $1.6 billion.