'Harry' helps EA stock rebound
Vidgame publishers Activision and Midway reported solid earnings Thursday, while Electronic Arts got a bump in its stock price as investors improved their view of the earnings it reported Wednesday.Midway Games has been under particular scrutiny of late as part of a corporate tussle between majority shareholder Sumner Redstone, chairman of Viacom and CBS Corp., and his daughter, Shari Redstone, who serves as vice chairman of Midway in addition to her role as prexy of the Redstone clan’s National Amusements exhibition firm. Midway remains stuck in the red but reported significantly improved earnings for the second quarter. Revenue rose 23% to $31.8 million and net loss declined 53% to $14.3 million on solid sales for “Lord of the Rings Online” and “Mortal Kombat: Armageddon” for the Wii. Midway has struggled to reach profitability for the past few years and has seen its stock decline 39% since Sumner Redstone announced his intention to take control in April 2004. He acquired his nearly 90% stake in Midway in large part through National Amusements. Reports have surfaced that his continued interest in Midway has been one of the bones of contention with Shari in her role as steward of National Amusements. Midway had to push back one of its most anticipated games for the holidays, “Wheelman,” to 2008, but reaffirmed guidance based on increased confidence for upcoming games “Stranglehold” and “Unreal Tournament 3.” Midway stock closed up 2% Thursday at $5.95. Activision, meanwhile, impressed Wall Street in securing its status as the top third-party publisher for the first half of the year. While a weak showing by traditional industry titan EA played a big role, Activision was also helped by boffo sales for “Guitar Hero 2” and “Spider-Man 3,” the second quarter’s No. 1 and No. 3 selling games in North America, respectively, as well as strong performance by its adaptations of “Shrek the Third” and “Transformers.” As a result, revenue grew 163% in the quarter ended June 30 to $495.5 million, and it swung from a net loss of $14.7 million last year to a profit of $32.8 million. That’s particularly impressive given that the second quarter is traditionally the slowest of the year for the vidgame biz and one in which most publishers lose money. Activision also upped guidance for the fiscal year ending March 31. It now expects revenue of $1.87 billion vs. a previous outlook of $1.8 billion. It’s counting on two huge franchise sequels, “Guitar Hero 3” and “Call of Duty 4,” to drive performance during the upcoming holidays and early next year. Activision shares rose 5% Thursday to $18.30. EA also enjoyed a bounce of 7% Thursday to $51.56 after it posted a smaller loss than some Wall Streeters had expected Wednesday. Publisher said its “Harry Potter and the Order of the Phoenix” game has already sold more than 2 million units worldwide, making it one of the summer’s top releases.