Activision Discontinues 'Guitar Hero,' Narrows Earnings Loss
Feb 9th 2011 6:30PM
Updated Feb 10th 2011 9:51AM
Video-game publisher Activision Blizzard (ATVI) narrowed its fourth-quarter loss 19% from a year earlier. The company cut its product and intellectual property costs in the quarter, and took smaller write-downs related to its casual gaming and music titles.
But shares fell in extended trading after the company forecast that its 2011 sales would fall short of analysts' estimates and announced that it would discontinue its "Guitar Hero" games because of lackluster sales.
The company's net loss narrowed to $233 million, or 20 cents a share, from $286 million, or 23 cents per share, in the same quarter a year ago. Revenue fell 8% to $1.43 billion. Meanwhile, fourth-quarter product and intellectual property costs dropped 18% from a year earlier, while impairment charges declined 20%.
Activision Blizzard's newest "Call of Duty" title, "Call of Duty: Black Ops," surpassed $1 billion in global sales in just seven weeks after its Nov. 9 release. The only other entertainment title to reach the $1 billion mark within the same time frame was the 2009 Fox film release of "Avatar," which has grossed almost $2.8 billion in global box-office receipts, according to BoxOfficeMojo.com.
Still, Activision continues to be affected by the overall sluggishness in the video-game market. New packaged game sales last year fell 5% from a year earlier to $10.1 billion, NPD Group said last month.
Activision expects full-year earnings for 2011 to amount to 56 cents a share on $3.95 billion in revenue -- well below analysts' estimates of 83 cents a share and $4.69 billion, according to a Thomson Reuters poll -- because of a lack of any new releases for its Blizzard Entertainment division.
In after-hours training, Activision Blizzard shares had fallen 7.3%, to $11.69 by about 7:30 p.m.