Activision Announces Second Quarter 2008 Results

Nov 5, 2007

-- Company Increases Fiscal 2008 Net Revenues and EPS Outlook -- -- Q3 Net Revenues Expected to Exceed $1 Billion --

SANTA MONICA, Calif., Nov 05, 2007 (BUSINESS WIRE) -- Activision, Inc. (Nasdaq:ATVI) today announced financial results for the second fiscal quarter ended September 30, 2007.

Net revenues for the second quarter were a record $317.7 million, a 69% increase, as compared to net revenues of $188.2 million reported for the same quarter last fiscal year. Net income for the second fiscal quarter was $0.7 million, or break-even earnings per share, as compared to a net loss of $24.3 million, or a loss per share of $0.09 reported for the second quarter of last fiscal year. Excluding the impact of expenses related to equity-based compensation, the company had net income of $4.9 million and earnings per diluted share of $0.02 for the second quarter. This compares to a net loss of $21.3 million and a loss per share of $0.08, excluding the impact of expenses related to equity-based compensation for the second quarter of last fiscal year.

Net revenues for the six-month period ended September 30, 2007 were $813.2 million, as compared to net revenues of $376.2 million reported for the six-month period of last fiscal year. Net income for the first six months was $28.5 million, or earnings per diluted share of $0.09, as compared with a net loss of $42.6 million, or a loss per share of $0.15, reported for the same period last fiscal year. Excluding the impact of expenses related to equity-based compensation, the company had net income of $37.7 million and earnings per diluted share of $0.12 for the first six months of fiscal 2008. This compares to a net loss of $36.1 million and a loss per share of $0.13, excluding the impact of expenses related to equity-based compensation for the six-month period of last fiscal year.

Robert Kotick, Chairman and CEO of Activision, stated, "Our second quarter net revenues were the highest in our company's history and we ended the quarter with $962 million in cash and short-term investments. We significantly strengthened our development capabilities through our acquisition of Bizarre Creations, a proven top-tier developer of racing games which will facilitate our entry into this important segment."

Kotick continued, "During Q3, we shipped more units of our internally developed, wholly owned franchise, Guitar Hero III(R): Legends of Rock, than any other game in Activision's history. Within the first seven days, consumer sell through was more than $100 million in North America alone -- our largest product launch ever. Our third-quarter slate is expected to deliver our strongest quarterly results to date, with forecasted net revenues in excess of $1 billion. The eagerly anticipated Call of Duty 4(TM): Modern Warfare(TM) will launch tomorrow, and all of our holiday titles in North America will be in retail distribution by mid-week. We are continuing to leverage our strong portfolio of franchises across key geographies and gaming platforms. As a result of our strong performance in the first six months of the fiscal year, and our solid third quarter release slate, we are raising our fiscal year 2008 net revenues and earnings outlook."

Business Highlights

During the second quarter, Activision released three titles -- one title worldwide, Guitar Hero(TM) Encore: Rocks the 80s(TM) on the PlayStation(R) 2 computer entertainment system from Sony, and two titles in Europe -- TRANSFORMERS: The Game on the Xbox 360(TM) video game and entertainment system from Microsoft, PLAYSTATION(R)3 computer entertainment system from Sony, Wii(TM) home video game system from Nintendo, PlayStation 2 computer entertainment system, PC, and the Nintendo DS(TM); and the online multiplayer game Enemy Territory: Quake Wars on the PC.

Other quarterly business highlights are as follows:

-- The Guitar Hero(TM) franchise is the #1 best-selling franchise in the U.S. for the calendar year, and the #3 franchise in the U.S. for the quarter, according to The NPD Group.

-- For the quarter, in Europe, TRANSFORMERS: The Game was the #2 third-party title on all platforms, according to Charttrack and Gfk, and in the U.S., it ranked as a top-10 best-selling console and handheld title, according to The NPD Group. Worldwide, TRANSFORMERS was also #1 third-party handheld title for the quarter, including the #1 best-selling game for the Nintendo DS and the PSP(R) (PlayStation(R) Portable) system, according to The NPD Group, Charttrack and Gfk.

-- On September 26, 2007, Activision announced that it had acquired U.K.-based developer Bizarre Creations, one of the world's premier video game developers and a leader in the racing category. The acquisition will enable Activision to enter the $1.4 billion racing category, which is the fourth most popular videogame genre and represents more than 10% of the total video game market worldwide.

-- For the quarter, Activision's international publishing net revenues grew 80% over the prior year, and for the first six months of the fiscal year were up 145% as compared to the same period for last fiscal year.

-- In the U.S., for the second quarter, Activision doubled its console and hand-held market share from 5% to 10% year over year, according to The NPD Group.

For the third quarter, Activision has already shipped Bee Movie Game in connection with DreamWorks Animation's theatrical release; Enemy Territory: Quake Wars in North America; Guitar Hero(R) III: Legends of Rock; Spider-Man(TM): Friend or Foe; and Tony Hawk's Proving Ground. Activision's Call of Duty(TM) 4: Modern Warfare(TM) will be released worldwide on November 6, 2007.

Company Outlook

Today, Activision increased its fiscal year 2008 net revenues and earnings per share outlook. For the full fiscal year, the company expects net revenues of $2.07 billion and earnings per diluted share of $0.55. Excluding the impact of equity-based compensation expense, the company expects earnings per diluted share of $0.65 for the full fiscal year.

For the back half of the fiscal year, Activision expects that the acquisition of Bizarre Creations will be dilutive by approximately $0.02 - $0.03 per share and this has been incorporated into the above fiscal year outlook. For the third quarter, the company expects net revenues of $1.05 billion and earnings per diluted share of $0.51. Excluding the impact of equity-based compensation expense, the company expects earnings per diluted share of $0.55 for the third quarter.

Conference Call

Today at 4:30 p.m. EST, Activision's management will host a conference call and Webcast to discuss its second quarter fiscal year 2008 results and outlook. The company welcomes all members of the financial and media communities to visit the "Investor Relations" area of www.activision.com to listen to the conference call via live Webcast, or to listen to the call live by dialing into (719) 325-4778 in the U.S.

Non-GAAP Financial Measures

Activision provides net income (loss) and earnings (loss) per share data both including (in accordance with GAAP) and excluding (non-GAAP) the impact of expenses related to employee stock options, employee stock purchase plans, restricted stock rights and other equity-based compensation and the associated tax benefits.

Prior to April 1, 2006, Activision accounted for equity-based compensation under the Accounting Principles Board, Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25"). In accordance with the APB No. 25, the company historically used the intrinsic value method to account for equity-based compensation. Beginning on April 1, 2006, the company has accounted for equity-based compensation using the fair value method under the Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" ("FAS 123(R)").

Net income (loss) and earnings (loss) per share, excluding (in both cases) the impact of expenses related to equity-based compensation, are not determined in accordance with generally accepted accounting principles (GAAP), and the exclusion of those amounts has the effect of increasing non-GAAP net income and non-GAAP earnings per share (and reducing non-GAAP net loss and non-GAAP loss per share) by the same amounts as compared with GAAP net income (loss) and GAAP earnings (loss) per share for the period. Activision recognizes that there are limitations associated with the use of these non-GAAP financial measures as they do not reflect net income (loss) and earnings (loss) per share results as determined in accordance with GAAP, and may reduce comparability with other companies that calculate similar non-GAAP measures differently. Management compensates for the limitations resulting from the exclusion of expenses related to equity-based compensation by considering the amount and impact of these expenses separately and by considering the company's GAAP as well as non-GAAP results and, in this release, by presenting the most comparable GAAP measures, net income (loss) and earnings (loss) per share, directly ahead of non-GAAP net income (loss) and non-GAAP earnings (loss) per share, and by providing a reconciliation in the accompanying table that shows and describes the adjustments made. Management does not believe the limitations resulting from the exclusion of these expenses are material, particularly when this non-GAAP financial measure is disclosed with its most comparable GAAP financial measure, net income (loss), and earnings (loss) per share. Management believes that the presentation of these non-GAAP financial measures provide investors with additional useful information to measure the company's financial performance because they allow for a better comparison of results in the periods reported herein to those in historical periods. Internally, management uses these non-GAAP financial measures in assessing the company's operating results, as well as in planning and forecasting.

These non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. Non-GAAP net income (loss) and non-GAAP earnings (loss) per share do not include the impact of certain expenses required to be recorded in order to present net income (loss) and earnings (loss) per share in accordance with GAAP. These non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles, and the terms non-GAAP net income (loss) and non-GAAP earnings (loss) per share do not have a standardized meaning. Therefore, other companies may use the same, or similarly named measures, but exclude different items, which may not provide investors a comparable view of the company's performance in relation to other companies in the same industry.

About Activision

Headquartered in Santa Monica, California, Activision, Inc. is a leading worldwide developer, publisher and distributor of interactive entertainment and leisure products. Founded in 1979, Activision posted net revenues of $1.5 billion for the fiscal year ended March 31, 2007.

Activision maintains operations in the U.S., Canada, the United Kingdom, France, Germany, Ireland, Italy, Sweden, Spain, the Netherlands, Australia, Japan and South Korea. More information about Activision and its products can be found on the company's World Wide Web site, which is located at www.activision.com.

Cautionary Note Regarding Forward-looking Statements: Information in this press release that involves Activision's expectations, plans, intentions or strategies regarding the future are forward-looking statements that are not facts and involve a number of risks and uncertainties. In this release, they are identified by references to dates after the date of this release and words such as "outlook", "will," "will be," "remains," "to be," "plans," "believes", "may", "expects," "intends," and similar expressions. Factors that could cause Activision's actual future results to differ materially from those expressed in the forward-looking statements set forth in this release include, but are not limited to, sales of Activision's titles in its fiscal year 2008, shifts in consumer spending trends, the seasonal and cyclical nature of the interactive game market, Activision's ability to predict consumer preferences among competing hardware platforms (including next-generation hardware), declines in software pricing, product returns and price protection, product delays, retail acceptance of Activision's products, adoption rate and availability of new hardware and related software, industry competition, rapid changes in technology and industry standards, protection of proprietary rights, maintenance of relationships with key personnel, customers, vendors and third-party developers, international economic and political conditions, integration of recent acquisitions and the identification of suitable future acquisition opportunities and foreign exchange rate changes.

Other such factors include the further implementation, acceptance and effectiveness of the remedial measures recommended or adopted by the special sub-committee of independent directors established in July 2006 to review our historical stock option granting practices, by the Board and by Activision, the outcome of the SEC's formal investigation and the derivative litigation filed in July 2006 against certain current and former directors and officers of Activision relating to Activision's stock option granting practices, and the possibility that additional claims and proceedings will be commenced, including additional action by the SEC and/or other regulatory agencies, and other litigation (unrelated to stock option granting practices) and any additional risk factors identified in Activision's most recent annual report on Form 10-K. The forward-looking statements in this release are based upon information available to Activision as of the date of this release, and Activision assumes no obligation to update any such forward-looking statements. Forward-looking statements believed to be true when made may ultimately prove to be incorrect. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and may cause actual results to differ materially from our current expectations.

ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except earnings (loss) per share data)

--------------------------------------------------- -------- ---------
                                   Quarter ended    Six months ended
                                    September 30,      September 30,
--------------------------------------------------- ------------------
                                   2007     2006      2007     2006
--------------------------------------------------- -------- ---------

Net revenues                     $317,746 $188,172  $813,201 $376,241
Costs and expenses:
 Cost of sales - product costs    151,996  127,374   369,225  235,997
 Cost of sales - software
  royalties and amortization       38,427    9,348   116,679   28,609
 Cost of sales - intellectual
  property licenses                14,533    4,356    47,012   14,272
 Product development               33,085   25,608    65,982   51,233
 Sales and marketing               51,868   32,550   120,580   68,729
 General and administrative        37,382   26,346    73,176   48,260
--------------------------------------------------- -------- ---------
      Total costs and expenses    327,291  225,582   792,654  447,100
--------------------------------------------------- -------- ---------
Operating income (loss)            (9,545) (37,410)   20,547  (70,859)
Investment income, net             12,132    8,032    23,694   16,307
--------------------------------------------------- -------- ---------
Income (loss) before income tax
 provision (benefit)                2,587  (29,378)   44,241  (54,552)
Income tax provision (benefit)      1,889   (5,076)   15,717  (11,941)
--------------------------------------------------- -------- ---------
Net income (loss)                $    698 $(24,302) $ 28,524 $(42,611)
=================================================== ======== =========

--------------------------------------------------- -------- ---------
Basic earnings (loss) per share  $   0.00 $  (0.09) $   0.10 $  (0.15)
Weighted average common shares
 outstanding                      287,315  280,627   285,450  279,487
--------------------------------------------------- -------- ---------

--------------------------------------------------- -------- ---------
Diluted earnings (loss) per share$   0.00 $  (0.09) $   0.09 $  (0.15)
Weighted average common shares
 outstanding assuming dilution    313,263  280,627   312,510  279,487
--------------------------------------------------- -------- ---------

ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
----------------------------------------------------------------------
                                           September 30,   March 31,
                                               2007          2007
                                            (Unaudited)
----------------------------------------------------------------------
ASSETS
----------------------------------------------------------------------
 Current assets:
      Cash, cash equivalents and short-term
       investments                          $    961,760  $    954,849
      Accounts receivable, net                   109,725       148,694
      Inventories                                189,033        91,231
      Software development                       104,236       107,779
      Intellectual property licenses              10,645        27,784
      Deferred income taxes                       60,032        51,564
      Other current assets                        31,453        19,332
----------------------------------------------------------------------
           Total current assets                1,466,884     1,401,233
----------------------------------------------------------------------
 Software development                             40,433        23,143
 Intellectual property licenses                   71,145        72,490
 Property and equipment, net                      53,500        46,540
 Deferred income taxes                            38,252        48,791
 Other assets                                     10,738         6,376
 Goodwill                                        280,248       195,374
----------------------------------------------------------------------
                  Total assets              $  1,961,200  $  1,793,947
======================================================================

----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------------------------------------------------
 Current liabilities:
      Accounts payable                      $    158,059  $    136,517
      Accrued expenses and other
       liabilities                               255,266       204,652
----------------------------------------------------------------------
            Total current liabilities            413,325       341,169
----------------------------------------------------------------------
      Other liabilities                           18,325        41,246
----------------------------------------------------------------------

                Total liabilities                431,650       382,415
----------------------------------------------------------------------
 Shareholders' equity:
      Common stock                                     -             -
      Additional paid-in capital               1,045,891       963,553
      Retained earnings                          456,301       427,777
      Accumulated other comprehensive
       income                                     27,358        20,202
----------------------------------------------------------------------
            Total shareholders' equity         1,529,550     1,411,532
----------------------------------------------------------------------
                Total liabilities and
                 shareholders' equity       $  1,961,200  $  1,793,947
======================================================================

ACTIVISION, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(In thousands, except earnings (loss) per share data)

----------------------------------------------------------------------
                  Cost of
                  Sales -
                  Software
                  Royalties                        General    Total
Quarter ended       and                               and      Costs
 September 30,     Amorti-   Product    Sales and   Adminis-    and
 2007              zation   Development  Marketing  trative   Expenses
----------------------------------------------------------------------
GAAP Measurement  $  38,427   $  33,085   $ 51,868  $ 37,382  $327,291
 Less: Equity-
  Based
  Compensation
  Adjustment(1)         248       2,414      1,868     2,339     6,869
                 -----------------------------------------------------
Non-GAAP
 Measurement      $  38,179   $  30,671   $ 50,000  $ 35,043  $320,422
======================================================================

                                                    Basic    Diluted
                                                    Earnings  Earnings
                              Operating    Net      (Loss)    (Loss)
Quarter ended September 30,     Income    Income      per       per
 2007                           (Loss)     (Loss)    Share     Share
---------------------------------------- --------- --------- ---------
GAAP Measurement               $ (9,545)  $   698    $ 0.00    $ 0.00
 Less: Equity-Based
  Compensation Adjustment(1)     (6,869)   (4,183)    (0.01)    (0.01)
                              ---------- --------- --------- ---------
Non-GAAP Measurement           $ (2,676)  $ 4,881    $ 0.02    $ 0.02
------------------------------========== ========= ========= =========

                   Cost of
                   Sales -
                   Software
                   Royalties                       General    Total
Six months ended     and                              and      Costs
 September 30,      Amorti-   Product   Sales and   Adminis-    and
 2007               zation   Development Marketing  trative   Expenses
-------------------------------------------------- --------- ---------
GAAP Measurement    $116,679     $65,982  $120,580   $73,176  $792,654
 Less: Equity-
  Based
  Compensation
  Adjustment(1)        2,093       3,921     3,639     5,376    15,029
                  -------------------------------- --------- ---------
Non-GAAP
 Measurement        $114,586     $62,061  $116,941   $67,800  $777,625
------------------================================ ========= =========

                                                    Basic
                                                    Earnings  Total
                               Operating    Net     (Loss)     Costs
Six months ended September 30,   Income    Income     per       and
 2007                            (Loss)    (Loss)    Share    Expenses
----------------------------------------- -------- --------- ---------
GAAP Measurement               $  20,547  $28,524    $ 0.10    $ 0.09
 Less: Equity-Based
  Compensation Adjustment(1)     (15,029)  (9,153)    (0.03)    (0.03)
                               ---------- -------- --------- ---------
Non-GAAP Measurement           $  35,576  $37,677    $ 0.13    $ 0.12
-------------------------------========== ======== ========= =========

(1)Includes expense related to employee stock options, employee stock purchase plan and restricted stock rights under Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment." See explanation above regarding the Company's practice on reporting non-GAAP financial measures. The per share equity-based compensation adjustment is presented as calculated, and the GAAP and non-GAAP earnings (loss) per share information is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(In thousands, except earnings (loss) per share data)

--------------------------------------- ---------- --------- ---------
                  Cost of
                  Sales -
                  Software
                  Royalties                        General    Total
Quarter ended       and                               and      Costs
 September 30,     Amorti-   Product    Sales and   Adminis-    and
 2006              zation   Development  Marketing  trative   Expenses
--------------------------------------- ---------- --------- ---------
GAAP Measurement   $  9,348   $  25,608   $ 32,550  $ 26,346  $225,582
 Less: Equity-
  Based
  Compensation
  Adjustment(1)           -         991        889     3,011     4,891
                 ---------------------- ---------- --------- ---------
Non-GAAP
 Measurement       $  9,348   $  24,617   $ 31,661  $ 23,335  $220,691
-----------------====================== ========== ========= =========

                                                    Basic    Diluted
                                                    Earnings  Earnings
                               Operating   Net      (Loss)    (Loss)
Quarter ended September 30,     Income    Income      per       per
 2006                            (Loss)    (Loss)    Share     Share
---------------------------------------- --------- --------- ---------
GAAP Measurement               $(37,410) $(24,302)  $ (0.09)  $ (0.09)
 Less: Equity-Based
  Compensation Adjustment(1)     (4,891)   (2,979)    (0.01)    (0.01)
                               --------- --------- --------- ---------
Non-GAAP Measurement           $(32,519) $(21,323)  $ (0.08)  $ (0.08)
-------------------------------========= ========= ========= =========

                 Cost of
                 Sales -
                 Software
                 Royalties                        General
Six months ended   and                               and      Total
 September 30,    Amorti-    Product   Sales and   Adminis-  Operating
 2006             zation    Development Marketing  trative   Expenses
-------------------------- ---------------------- --------- ----------
GAAP
 Measurement     $  28,609 $     51,233  $ 68,729  $ 48,260 $  447,100
 Less: Equity-
  Based
  Compensation
  Adjustment(1)         36        2,670     1,929     6,105     10,740
                ---------- ---------------------- --------- ----------
Non-GAAP
 Measurement     $  28,573 $     48,563  $ 66,800  $ 42,155 $  436,360
----------------========== ====================== ========= ==========

                                                    Basic    Diluted
                                                    Earnings  Earnings
                               Operating   Net      (Loss)    (Loss)
Six months ended September 30,  Income    Income      per       per
 2006                            (Loss)    (Loss)    Share     Share
---------------------------------------- --------- --------- ---------
GAAP Measurement               $(70,859) $(42,611)  $ (0.15)  $ (0.15)
 Less: Equity-Based
  Compensation Adjustment(1)    (10,740)   (6,541)    (0.02)    (0.02)
                               --------- --------- --------- ---------
Non-GAAP Measurement           $(60,119) $(36,070)  $ (0.13)  $ (0.13)
-------------------------------========= ========= ========= =========

(1)Includes expense related to employee stock options, employee stock purchase plan and restricted stock rights under Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment." See explanation above regarding the Company's practice on reporting non-GAAP financial measures. The per share equity-based compensation adjustment is presented as calculated, and the GAAP and non-GAAP earnings (loss) per share information is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Six Months Ended September 30, 2007
(Amounts in thousands)

                                                             Percent
                                                             Increase
                                     Quarter Ended          (Decrease)
                            ------------------------------------------
                            September 30,    September 30,
                                  2007             2006
                                     % of             % of
                             Amount   Total   Amount   Total
--------------------------- -------- ------- -------- ----------------
Geographic Revenue Mix
 North America              $161,804    51%  $ 74,249    40%      118%
 International               155,942    49%   113,923    60%       37%
--------------------------- -------- ------- -------- ----------------
 Total net revenues         $317,746   100%  $188,172   100%       69%
--------------------------- -------- ------- -------- ----------------


--------------------------- -------- ------- -------- ----------------
Segment/Platform Mix
Publishing:
 Console                    $200,159    63%  $ 84,136    45%      138%
 Hand-held                    39,070    12%    23,202    12%       68%
 PC                           14,530     5%    18,066    10%      -20%
--------------------------- -------- ------- -------- ----------------
 Total publishing net
  revenues                  $253,759    80%  $125,404    67%      102%
--------------------------- -------- ------- -------- ----------------

Distribution:
 Console                    $ 40,325    13%  $ 33,337    18%       21%
 Hand-held                    18,670     6%    23,372    12%      -20%
 PC                            4,992     1%     6,059     3%      -18%
--------------------------- -------- ------- -------- ----------------
 Total distribution net
  revenues                  $ 63,987    20%  $ 62,768    33%        2%
------------------------------------ ------- -------- ----------------
 Total net revenues         $317,746   100%  $188,172   100%       69%
--------------------------- -------- ------- -------- ----------------

                                                             Percent
                                                             Increase
                                    Six Months Ended        (Decrease)
                            ------------------------------------------
                            September 30,    September 30,
                                  2007             2006
                                     % of             % of
                             Amount   Total   Amount   Total
--------------------------- -------- ------- -------- ----------------
Geographic Revenue Mix
 North America              $471,340    58%  $173,863    46%      171%
 International               341,861    42%   202,378    54%       69%
--------------------------- -------- ------- -------- ----------------
 Total net revenues         $813,201   100%  $376,241   100%      116%
--------------------------- -------- ------- -------- ----------------


--------------------------- -------- ------- -------- ----------------
Segment/Platform Mix
Publishing:
 Console                    $558,932    69%  $174,325    46%      221%
 Hand-held                    95,686    12%    49,786    13%       92%
 PC                           28,363     3%    36,055    10%      -21%
--------------------------- -------- ------- -------- ----------------
 Total publishing net
  revenues                  $682,981    84%  $260,166    69%      163%
--------------------------- -------- ------- -------- ----------------

Distribution:
 Console                    $ 83,426    10%  $ 62,125    17%       34%
 Hand-held                    37,786     5%    41,585    11%       -9%
 PC                            9,008     1%    12,365     3%      -27%
--------------------------- -------- ------- -------- ----------------
 Total distribution net
  revenues                  $130,220    16%  $116,075    31%       12%
------------------------------------ ------- -------- ----------------
 Total net revenues         $813,201   100%  $376,241   100%      116%
--------------------------- -------- ------- -------- ----------------

ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Six Months Ended September 30, 2007


                               --------- --------- --------- ---------
                                                     Six       Six
                               Quarter   Quarter    Months    Months
                                 Ended     Ended     Ended     Ended
                               September September September September
                                30, 2007  30, 2006  30, 2007  30, 2006

------------------------------ --------- --------- --------- ---------
Publishing Net Revenues

 PC                               6%        14%       4%        14%
------------------------------ --------- --------- --------- ---------

 Console                          79%       67%       82%       67%
------------------------------ --------- --------- --------- ---------
  Sony PlayStation 3              4%        0%        5%        0%
  Sony PlayStation 2              47%       45%       39%       41%
  Microsoft Xbox 360              23%       14%       31%       12%
  Nintendo Wii                    5%        0%        7%        0%
  Other                           0%        8%        0%        14%

 Hand-held                        15%       19%       14%       19%
------------------------------ --------- --------- --------- ---------
  Sony PlayStation Portable       6%        5%        4%        3%
  Nintendo Dual Screen            8%        7%        8%        7%
  Nintendo Game Boy Advance       1%        7%        2%        9%

------------------------------ --------- --------- --------- ---------
 Total publishing net revenues   100%      100%      100%      100%
---------------------------------------- --------- --------- ---------

SOURCE: Activision, Inc.

Activision, Inc.
Kristin Southey, Vice President, IR and Treasurer
310-255-2635
ksouthey@activision.com
or
Maryanne Lataif, Vice President, Corporate Communications
310-255-2704
mlataif@activision.com

Copyright Business Wire 2007

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