Activision Posts Loss as Sales Slow Ahead of Switch to New Consoles

Activision Inc. posted a smaller-than-expected quarterly loss Thursday amid a video game industry downturn spawned by a switch to new console technology.

Santa Monica-based Activision had a fiscal fourth-quarter net loss of $9.2 million, or 3 cents a share, contrasted with net income of $3.6 million, or 1 cent, a year earlier.

Revenue fell 7.7% to $188.1 million.

The results topped estimates from analysts, who had expected the company to lose 8 cents a share on revenue of $132.5 million, according to Reuters Estimates.

For its fiscal year ending March 2007, Activision expects revenue of $1.03 billion and earnings of 10 cents a share, including the cost of expensing employee stock options.

Excluding options-related costs, Activision expects to earn 15 cents a share.

Gaming enthusiasts for months have put off purchases as they wait for the release and broad availability of next-generation systems.

Microsoft Corp.’s Xbox 360 was first to market in November and manufacturing-related shortages have only just begun to ease. Rival systems from Nintendo Co. and market leader Sony Corp. are expected this year.

Analysts expect continued industry weakness throughout calendar 2006 and possibly into 2007, as ownership of the new consoles builds to levels that can support a high volume of game sales.

Shares of Activision, which had closed down 55 cents at $13.09, rose to $13.45 in extended trading after the earnings report.