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Activision's Revenue Tumbles 24% in Quarter, Causing Loss

May 09, 2003|Alex Pham | Times Staff Writer

Video game publisher Activision Inc. posted a 24% drop in revenue and a net loss for its fourth quarter but still managed a 10% jump in revenue and higher profit for the fiscal year.

The Santa Monica company, which released just one new game in the quarter ended March 31, lost $8 million, or 13 cents a share, on $125 million in revenue. It had earned $10.9 million, or 17 cents a share, on revenue of $164.9 million in the same period last year, when it released seven new games.

Revenue for the fiscal year totaled $864.1 million, up from $786.4 million in fiscal 2002. Net income grew 27% to $66.2 million, or 96 cents a share, from $52.2 million, or 88 cents, last year.

Activision's shares lost 50 cents to close at $17.57 on Nasdaq before the results were released but climbed as high as $18.25 in after-hours trading.

The maker of game franchises such as "Tony Hawk Pro Skater" forecast a weaker year ahead, however, with $750 million in revenue and a profit of 70 cents a share.

"We are still somewhat cautious about the year given the current uncertain economic conditions," said Robert Kotick, Activision's chief executive. "This is a very, very unstable economy."

Activision's chief operating officer, Ron Doornink, told analysts in a conference call that the company projects industry game sales in North America and Europe to grow just 10% this year. Executives of THQ Inc., which reported its earnings Wednesday, projected industry sales growth of 10% to 15%.

In its fourth quarter, Activision took a $7-million charge to cover licensing costs and an $8-million charge for canceling game projects. Analysts approved of the cancellations, similar to a paring down of lineups by other game companies.

"It positions the company to substantially exceed their earnings guidance," said Michael Pachter, analyst with Wedbush Morgan Securities, which does not do business with Activision or own its shares. "It was a smart thing for them to do."

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