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Activision posts a loss

Results are hurt by its merger with Vivendi Games. Revenue exceeds

February 12, 2009|Alex Pham

Activision Blizzard Inc. posted a fourth-quarter loss Wednesday, but its operating profit and revenue beat Wall Street's forecasts.

Amped by strong sales of its Guitar Hero, Call of Duty and World of Warcraft game franchises, the Santa Monica company reported revenue of $1.6 billion for the quarter and $3 billion for the full year.

"We had a fantastic year," Chief Executive Bobby Kotick said in an interview. "And we're expecting to grow our margins even further this year."

Revenue would have been higher had Activision not deferred revenue from sales of titles that have online gaming features.

Activision and rival Electronic Arts Inc. in recent years have begun to spread out the revenue they get from these games to reflect the cost of maintaining a related online service. Adding that revenue would have boosted Activision's annual sales to $3.7 billion.

The figure also doesn't include sales from Activision's standalone business before its July merger with Vivendi Games, which would have added $1.3 billion in sales for a combined $5 billion.

The company posted a net loss of $72 million, or 5 cents a share, for the quarter that ended Dec. 31, primarily because of write-offs related to the Vivendi Games merger.

Excluding those one-time charges, Activision had operating profit of $429 million, or 31 cents a share, two cents higher than Wall Street analysts had expected.

Because of the Vivendi merger, the combined company does not have comparable sales and profit figures from 2007. The company also shifted its fiscal year. It used to end on March 31, but 2008 was cut short to end Dec. 31.

"They had a good quarter during a bad economy," said Colin Sebastian, an analyst with Lazard Capital Markets. "Activision is still far ahead of their competitors in terms of operating margins."

Activision, however, warned of lower revenue for 2009, mostly because a strong dollar is expected to dilute the value of its European sales.

Its shares fell 14 cents to $9.48 in regular trading, then sank an additional 31 cents to $9.17 in after-hours trading following the announcement.


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