Video-game publisher and Motley Fool Stock Advisor recommendation Activision
The company's performance in the quarter was driven by a pair of key titles. Over the Hedge sold more than 2 million units during the quarter, while X-Men: The Official Game broke the million-unit mark for the quarter as well. Both titles were released across a full range of platforms, including the Sony
Despite the better-than-expected results, however, the company's earnings forecast for the remainder of the year is weak. Like Electronic Arts, Activision is guiding low for the period leading up to the highly-anticipated release of the next-generation Sony and Nintendo game consoles later this year. For the second quarter, the company expects revenues of $130 million and a net loss excluding stock option expense of $0.13 per share, while the analyst estimate calls for a loss of only $0.03 per share.
And for the full year, Activision sees earnings excluding stock-option expense of $0.15 per share. While that figure is a penny better than the $0.14-per-share analyst estimate, it is less than impressive when you consider that the company beat by five pennies in the first quarter.
That said, video game stocks have been on the rise over the past week or so as the key players' earnings results have demonstrated that the weak near-term expectations during this rough console transition period are probably a little too weak, and the stocks have been beaten down a little far as well. Moreover, the focus here is on the long term. And with the next-generation consoles finally on the way, investors have a reason to optimistic about video game stocks in general, and leaders such as Electronic Arts, Activision, and THQ in particular.
Electronic Arts and Activision are both recommendations of the Motley Fool Stock Advisor newsletter. If you're interested in finding more great companies, take afree trialto see what stocks David and Tom Gardner have recommended.
Microsoft is an Inside Value pick.