Activision Blizzard (ATVI)

Activision Announces Record Q3 FY 2008 Results

Net revenues for the nine-month period ended December 31, 2007 were $2.3 billion, as compared to net revenues of $1.2 billion reported for the nine-month period of last fiscal year.   Net income for the first nine months was $300.7 million, and earnings per diluted share were $0.96, as compared with net income of $100.2 million and earnings per diluted share of $0.33, for the same period last fiscal year.  Excluding the impact of expenses related to equity-based compensation, the company had adjusted net income of $322.6 million and earnings per diluted share of $1.03 for the first nine months of fiscal 2008.   This compares to adjusted net income of $111.4 million and earnings per diluted share of $0.37, excluding the impact of expenses related to equity-based compensation for the nine-month period of last fiscal year.

Robert Kotick, Chairman and CEO of Activision stated, “For the first time, we were the #1 U.S. console and handheld publisher for the calendar year, according to The NPD Group.  With videogame software sales increasing 37% in the United States overall, the videogame market growth exceeded even our own forecasts, and we believe this momentum will continue over the coming years. Broader audiences are responding to products like Guitar Hero and we expect that the demographics for videogames will continue to expand.”

Kotick continued, “We exceeded our quarterly financial goals. Our third quarter net revenues were a record $1.48 billion.  We delivered 27% operating margin, which contributed to a 43% return on invested capital for the last 12 months(1). Two of our wholly owned, internally developed franchises — Call of Duty® 4: Modern Warfare™ and Guitar Hero® III: Legends of Rock™ — set industry records.  Our solid performance during the first nine months of the fiscal year has already resulted in our 16^th consecutive year of revenue growth and record operating margins.  Our product and market momentum gives us confidence to once again raise our fiscal year 2008 net revenues and earnings outlook, as we continue to focus our marketing and sales efforts.”

Kotick added, “We are on schedule toward obtaining the stockholder and regulatory approvals needed to complete our business combination with Vivendi Games, which will create the world’s largest and most profitable independent video game company and should allow us to continue delivering exceptional returns to our shareholders.   The combined company expects to have the broadest, most diverse

(1) Return on invested capital (ROIC) is a non-GAAP measure determined by taking the ratio of net income, excluding investment income and the related tax effect, to the average of total assets excluding cash and short-term investments and non-interest-bearing current liabilities.

Activision Announces Record Q1 FY 2008 Results

Kotick continued, “Our focus on growing our strong franchises and next- generation console leadership position is yielding superb results.  We intend to continue expanding our franchise portfolio, strengthening our development capabilities and improving our operating efficiency over the balance of the fiscal year.  We believe this strategy will create strengths and capabilities that should enable us to continue growing our revenues, operating margin and earnings per share, as well as increase our return on invested capital.”