Activision Raises Third Quarter and Fiscal Year 2008 Outlook

Activision, announced today that based on better than expected consumer response to its holiday slate worldwide, the company is raising its net revenue and earnings per diluted share outlook for the third quarter, ending December 31, 2007, and fiscal year 2008.

For the full fiscal year 2008, Activision expects record net revenues of $2.30 billion and earnings per diluted share of $0.75, as compared to its previous outlook of net revenues of $2.07 billion and earnings per diluted share of $0.55. Excluding the impact of equity-based compensation expense, which Activision expects to total $0.10 per diluted share for the full fiscal year 2008, the company expects earnings per diluted share of $0.85 for the full fiscal year, as compared to the company's previous outlook of $0.65.

For the month of October, Activision was the #1 U.S. console and handheld publisher, increasing its U.S. market share to a record 28.7%, according to The NPD Group. The company's performance was driven by the success of Guitar Hero(R) III: Legends of Rock(TM), which was the #1 U.S. best-selling title across all platforms, despite only one week of sales during the month.

Robert Kotick, Chairman and CEO, Activision, Inc., said, "We are well on our way to delivering our 16th consecutive year of revenue growth and the most profitable year in our history. We are confident that the third quarter of fiscal 2008 will be the largest and most profitable quarter ever. Guitar Hero III: Legends of Rock and our newly released Call of Duty 4(TM): Modern Warfare(TM) already are two of the biggest entertainment titles this year. Due to the strong consumer response to our slate through October and strong retail sales over the Thanksgiving weekend, we are raising our financial outlook for the December quarter and the fiscal year."

Kotick added, "As an organization we continue to exceed our growth goals. This year, we expect that we will generate operating margins in our peak cycle target range, which is about two to three years ahead of plan. We continue to strengthen and grow our franchise portfolio and internal development resources with new brands like Guitar Hero and TRANSFORMERS and the acquisition of Bizarre Creations. This combined with our market momentum and the expanding installed hardware base worldwide, should enable us to continue growing our top and bottom line results through the remainder of this console cycle."