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The Santa Monica, California-based company posted a net loss of $108 million or $0.08 per share for the quarter, compared to net income of $48 million or $0.08 per share in the prior-year period.
Non-GAAP split-adjusted earnings were $0.07 per share for the quarter, compared to the earlier outlook of $0.04 per share.
Adjusted earnings for the quarter excludes the impact of the change in deferred net revenues and cost of sales or $0.01 per share, the impact of equity-based compensation expense or $0.01 per share, Activision Blizzard's non-core exit operations loss or $0.05 per share, one-time costs related to the business combination with Vivendi Games of $0.04 per share, and the amortization of intangibles and the changes in costs of sales resulting from purchase price accounting adjustments of $0.04 per share.
Robert Kotick, Chief Executive Officer, Activision Blizzard said, "For our first quarter as a combined company, Activision Blizzard's financial results were higher than the outlook we provided on our last earnings call, both on a GAAP and non-GAAP basis."
Activision Blizzard said its performance was driven by continued strong worldwide sales of Call of Duty 4: Modern Warfare, Guitar Hero: Aerosmith and Guitar Hero: On Tour, Blizzard Entertainment's World of Warcraft and the international release of LucasArts' Star Wars: The Force Unleashed.
Quarterly total net revenues more than doubled to $711 million from $326 million in the prior-year period.
Total costs and expenses rose to $905 million for the quarter from $269 million in the year-ago period, with cost of product sales rising to $279 million from $31 million last year. For the first nine months, the company reported a loss of $36 million or $0.04 per share, compared to net income of $141 million or $0.24 per share in the corresponding period.
Year-to-date, total revenues jumped to $1.387 billion from $896 million in the comparable period last year.
Separately, Activision Blizzard also announced that its Board authorized a stock repurchase program under which the company can repurchase up to $1 billion of the company's common stock.
Kotick said in the December quarter, the company will launch its strongest holiday slate ever, based on some of the best-selling franchises in the industry.
"However, we remain cautious given the likely slowdown in consumer spending this holiday season," he added.
The company said a considerable amount of net revenues and costs of sales that would have been recognized in the December quarter will be recognized in calendar year 2009, as revenues related to the sale of World of Warcraft boxed software will continue to be deferred. These changes will have a material impact on the company's calendar 2008 GAAP results.
For the December quarter 2008, Activision Blizzard expects GAAP loss per share of $0.01 and non-GAAP earnings of $0.29 per share, excluding items. GAAP net revenues for the December quarter are estimated at $1.6 billion, while non-GAAP net revenues are projected to be $2.2 billion, excluding items.
Buoyed by strong momentum through the first 9 months of the year and the solid holiday slate, Activision Blizzard reaffirmed full year non-GAAP outlook of $4.9 billion in revenues and $1.2 billion in operating income.
Amongst peers, New York-based Take-Two Interactive Software Inc. (TTWO | Quote | Chart | News | PowerRating) reported a turn to profit for the third quarter, helped by strong sales of blockbuster "Grand Theft Auto IV" as well as "Top Spin 3" and "Sid Meier's Civilization Revolution". The company reported GAAP net income of $51.8 million or $0.67 per share, compared to a GAAP net loss of $58.5 million or $0.81 per share for the year-ago quarter. Third quarter revenues more than doubled to $433.84 million from $206.42 million in the same quarter last year. Looking forward, the company lowered its revenue and earnings outlook for the fourth quarter but raised its revenue and earnings forecast for the fiscal year 2008.
The Redwood City, California-based Electronic Arts Inc. (ERTS | Quote | Chart | News | PowerRating) lowered its earnings outlook for the fiscal year 2009 and said it will eliminate about 6% of its workforce as part of a cost cutting plan.
Shares of Activision Blizzard, which have traded in a range of $9.405 to $19.28 over the past year, closed Wednesday's regular trading session at $10.98, down $0.88 or 7.42% on a volume of about 17.65 million shares. In the after hours, the stock gained $1.07 or 9.74%, trading at $12.05.
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