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Activision Announces Record Quarter, Forecasts $1 Billion On GH3 Success

Activision has revealed, in its fiscal second quarter results, revenues of $317.7 million, the highest in the company's history, on the success of the Guitar Hero franchise, which the company says could bring third quarter net revenues in excess of
Activision has revealed financial results for its second fiscal quarter ended September 30, 2007, announcing net revenues for the second quarter of $317.7 million, driven by the success of the Guitar Hero franchise and Transformers, and marking a 69% increase over the same quarter in the previous fiscal year. Profits for the quarter were $4.9 million, compared to a net loss of $21.3 million for the second quarter of last fiscal year. The company saw net revenues of $813.2 million for the six-month period ended September 30, 2007 were $813.2 million – over twice what it was for the same period of last fiscal year. Activision Chairman Robert Kotick commented that the second-quarter net revenues were “the highest in our company’s history,” adding that Activision ended the quarter with $962 million in cash and short-term investments. On Activision’s earnings call, CEO Mike Griffith said the company shipped more units of Guitar Hero III than any other game in Activision’s history. “Within the first seven days, consumer sell through was more than $100 million in North America alone -- our largest product launch ever,” he said. Kotick also said that the company’s acquisition of Bizarre Creations “significantly strengthened our development capabilities,” particularly the racing game arena, into which Activision plans on making an entry. Added Kotick, “We are continuing to leverage our strong portfolio of franchises across key geographies and gaming platforms.” Activision is also confident in its third quarter slate, which includes the Bee Movie Game in connection with DreamWorks Animation’s theatrical release; Enemy Territory: Quake Wars in North America; Spider-Man: Friend or Foe; and Tony Hawk’s Proving Ground. In particular, the company forecasts third quarter net revenues to exceed $1 billion on the success of Guitar Hero III and Call of Duty 4: Modern Warfare, which launches November 5th, or one day following the company’s earnings announcement. In particular, the company is enthusiastic about the Call of Duty franchise’s future prospects. Griffith expressed pride that Activision has achieved success developing for the “technically challenging” PS3, noting that the company has “succeeded where others were struggling.” On the launch of Call of Duty 4, Griffith promised, “We will continue to drive momentum through the holiday season into next year with a variety of downloadable content available in the months ahead.” However, he warned that Guitar Hero III supplies would likely not meet enormous demand, a similar tone to the one taken by EA’s John Riccitiello regarding Rock Band. Said Griffith, “Given initial consumer demand, it’s possible demand will outstrip supply across all platforms before Christmas. To help ensure we continue momentum, we have over 30,000 in-store kiosks where consumers can demo the game, more than triple the number of kiosks we had last year.”

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