February 12, 2009

Activision Suffers Despite Successful Guitar Hero

On Wednesday, Activision Blizzard, the company behind Guitar Hero, posted a $72 million net loss in the fourth quarter, despite owning one of the most popular video game franchises in the world, Reuters reported.

The company would have earned $429 million on net revenue of $1.64 billion"”excluding deferred revenue and some charges, but it's the company's first full quarter since its merger with Vivendi's game unit.

However, analysts say Activision Blizzard offered gloomy 2009 guidance, causing the stock to fall 4 percent in after-hours trading after rising 1 percent to $9.48 in the regular session.

The gaming company predicted $4.7 billion in revenue this year, but came in around $500 million shy of what analysts were estimating.

Executives from the company are looking on the bright side, though.  They said during a conference call with analysts Wednesday that the recession could provide acquisition opportunities in the near future.

The past six months have been detrimental to video game stocks, as the market continues to suffer. Electronic Arts, the biggest video game company, is down 65 percent, and THQ is off 81 percent.

"We had four of the top 10 best-selling games worldwide," said Activision Blizzard CEO Robert Kotick in 2008.

Activision Blizzard spawned the music genre for video games With "Guitar Hero," which brings in over 10 percent of the entire industry's software sales.

"Guitar Hero" was the world's biggest-selling franchise last year, and "Guitar Hero World Tour" sold more than any other game during the Christmas holiday.

But experts said company's underwhelming guidance was surprising, given the strength of its lineup this year.

New titles, "Guitar Hero Metallica" and "Monsters vs. Aliens," based on the 3-D movie from DreamWorks Animation, are expected to hit store shelves this year.

"Guitar Hero Metallica" features music from Metallica and 20 other bands chosen by them.

Film franchise games like "X-Men Origins: Wolverine," "Transformers: Revenge of the Fallen" and "Ice Age: The Meltdown" are also expected to do well this year.

And a new "DJ" extension for "Guitar Hero" is currently being developed as well as a greatest-hits version of the franchise due this year.


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