Guitar Hero III lifts Activision earnings forecast
By Ned Randolph -- Video Business, 11/27/2007
NOV. 27 | The popularity of Guitar Hero III: Legends of Rock caused videogame publisher Activision to revise its financial guidance positively based on better-than-expected holiday sales in the quarter.
Activision's hit game was the top-selling title in the U.S. in October.
The news shot up the company’s stock nearly 14%, to close at $21.54.
Activision said in a statement that it expects to earn 66¢ a share on $1.23 billion in sales for its fiscal third quarter, up from a prior estimate of 51¢ a share on revenue of $1.05 billion. Excluding equity-based compensation charges, Activision estimates it will earn 70¢ a share.
The company also raised its fiscal 2008 estimates to earnings of 75¢ a share on $2.3 billion in sales, from an earlier forecast of 55¢ a share on revenue of $2.07 billion.
The game publisher said it was the top U.S. seller of console and handheld games in October, which increased its U.S. market share to 28.7%.
The company said Guitar Hero III: Legends of Rock was the top-selling U.S. title across all platforms, despite only one week of sales during the month. According to the NPD Group, Guitar Hero III has sold 1.4 million units.
"We are well on our way to delivering our 16th consecutive year of revenue growth and the most profitable year in our history," said Robert Kotick, chairman and CEO of Activision. "We are confident that the third quarter of fiscal 2008 will be the largest and most profitable quarter ever. Guitar Hero III: Legends of Rock and our newly released Call of Duty 4: Modern Warfare already are two of the biggest entertainment titles this year. Due to the strong consumer response to our slate through October and strong retail sales over the Thanksgiving weekend, we are raising our financial outlook for the December quarter and the fiscal year."
The better-than-expected forecast appears to be isolated to Activision, however. Last week, videogame retailer GameStop lowered expectations for its current fourth quarter.
