Activision Expects Record Q3 RevenuesFor the fiscal third quarter ended December 31, 2006, the company expects to report record net revenues of $822.8 million, as compared to $816.2 million for the third quarter of last fiscal year and the companys prior outlook of $600.0 million. Earnings per diluted share for the quarter are expected to be $0.41 (including equity-based compensation of $0.01 per diluted share), as compared with earnings per diluted share for the prior-year fiscal third quarter of $0.23. Excluding the impact of equity-based compensation, the company expects to report earnings per diluted share of $0.42 for the fiscal third quarter. The company expects that the fiscal third quarter will be the largest and most profitable quarter in the companys history (excluding any additional equity-based compensation expenses that may be required in connection with the ongoing review of its historical stock option grant practices), due to better-than-expected consumer response to its holiday slate and catalogue titles, as well as the strength of its distribution business. For the fiscal second quarter ended September 30, 2006, Activision still expects to report net revenues of $188.2 million, as compared to net revenues of $222.5 million for the prior fiscal year. The company expects to report a loss per share of $0.06 (including equity-based compensation of $0.01 per share), as compared to a loss per share of $0.05 for the previous fiscal years second quarter. Excluding the impact of equity-based compensation, the company expects to report a loss per share of $0.05 for the fiscal second quarter. The company believes that its fourth quarter results will be significantly impacted by higher legal expenses relating primarily to its internal review of historical stock option practices, including expenses relating to the previously announced informal SEC inquiry and derivative litigation, and its decision to move the release of Enemy Territory(TM): QUAKE Wars into fiscal year 2008. For its fourth quarter, the company expects net revenues of $170 million and a loss per share of $0.10 (including equity-based compensation of $0.01 per share). Excluding the impact of equity-based compensation, the company expects a loss per share of $0.09. For fiscal year 2007, Activision is increasing its net revenue outlook to $1.37 billion, as compared to its prior outlook of $1.15 billion, based on better-than-expected net revenue performance in the third quarter. The company also is raising its diluted earnings per share outlook for the year to $0.20 (including equity-based compensation of $0.05 per diluted share). Excluding the impact of equity-based compensation, the company expects diluted earnings per share of $0.25, which is $0.10 higher than its prior outlook. The company also reaffirmed its fiscal year 2008 net revenue outlook which is expected to exceed $1.6 billion. Robert Kotick, Chairman and CEO of Activision, Inc., commented, "Net revenues for the third quarter of fiscal 2007 are expected to be the highest in Activisions history. Our results were driven by a smaller, high-quality game slate that was anchored by four key games -- Call of Duty(R) 3, Marvel(TM): Ultimate Alliance(TM), Tony Hawks Project 8(TM) and Guitar Hero II(TM). We remain optimistic about the long-term opportunities afforded by the new consoles, although we are cautious of the many risks that still exist as we transition from the current-generation console and handheld systems to the next-generation of hardware."