Seeking Alpha
Profile| Send Message|
( followers)  
Activision (NASDAQ:ATVI) this morning said it expects to report revenue for the fiscal fourth quarter ended March 31 of $313 million, which is a whopping $100 million ahead of the Street consensus of $213.8 million. The company did not provide any EPS estimate, due to its ongoing stock-options backdating probe.

On that subject, the company also said it expects to take $67 million in non-cash charges to reflect costs related to options granted in 1994 through 2006.

Activision says it expects to bring its financial filings current by the end of this month.

The company said the strong quarter reflects demand for its Guitar Hero II and Call of Duty 3 games, as well as better-than-expected performance of the company’s distribution business due to the European launch of Sony’s (NYSE:SNE) Playstation 3.

Activision also reaffirmed its fiscal 2008 outlook for revenue of at least $1.6 billion. The Street has been at $1.69 billion.

David Joseph, an analyst at Morgan Stanley, expects the strong revenue number to translate into just 2-3 cents of incremental EPS above current Street consensus of a loss of 8 cents a share, given some of the upside came from the low-margin distribution business and incremental costs related to the stock-option issue.

Todd Mitchell, an analyst at Kaufman Bros., said results were aided by the relatively high average selling price for Guitar Hero II - $90 - and the impact of the weak dollar on international sales.

Mitchell thinks the June quarter will be strong as well, and that May could be the company’s best month of the year, given strong sales of Guitar Hero II on the Xbox 360, the launch of Spider-Man 3 this week and Shrek the Third at the end of the month. “Right now, Activision is enjoying easy comps and a strong line up, while its peers have touch comps and a relatively light line up,” he says. “This dynamic reverses itself later in the year.”

Mitchell repeated his Hold recommendation and $21 price target on the stock; he thinks the shares are already pricing in the strong current quarter. His advice (and the headline on his note): It’s Over Baby, Time To Focus Elsewhere.

Activision today is off 12 cents at $20.73.

Source: Activision: Stock Slips Despite Expected Huge FY Q4 Revenue Beat