Apocalypse Is Delayed, but It's Not the End of the World for Activision

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By most any standard of wildness -- even that of the video game community -- the party celebrating the fall release of Activision's (ATVI) - Get ReportApocalypse was wild. Riding on the outstretched arms of the mosh pit, the Barbie-like singer Poe belted out her hit Hello, while Bruce Willis admired from a balcony above. Free liquor flowed at the recent E3 convention in Atlanta, as video game designers, Wall Street analysts, reporters and Activision execs all raised a glass (or two) to the game slated as Activision's breakout Playstation hit for the fall. The party, and Apocalypse itself, generated nice write-ups in USA Today, Newsday and The San Francisco Chronicle.

But now comes word that

Apocalypse

will not be delivered in time to make the crucial Christmas selling season. The game stars Willis -- with Poe as his sidekick -- and the company was hoping to get it out for the fall (and Activision's third quarter). But buried in the documents that came with the third-quarter earnings was a new game release schedule that showed

Apocalypse

missing Christmas.

"Yes, we'd rather have it in a Christmas quarter," says CEO Robert Kotick. "But there's work to be done on this game before we can get it out. Anyway, we never said for

sure

we'd have it for Christmas: We were saying hopefully, possibly by Christmas."

Christan Svensson, editor of

Next Generation Online

, a top video game publication, played the latest iteration of

Apocalypse

last week. "It's clearly got a way to go," says Svensson. "And it's much better than it was at E3. There were other games at E3, games like

ASC Games'

One

that were blowing

Apocalypse

away. Nobody likes to ship their games late, and Activision is probably not too keen to make it clear this won't be coming until 1998. But that's part of the business."

But before you unload that Activision stock -- slow down. It's not a one-game company. Larry Marcus, the widely respected video game analyst at

Alex. Brown

, says he thinks the stock price is a great deal right now. "Activision is more of a bet on a company, not a title," says Marcus, who maintains a buy rating on the stock. "They still have

Hexen II

and

Quake 2

for Christmas.

Broderbund

(BROD)

might be the

Myst

company -- but Activision isn't the

Apocalypse

company," Marcus says. "You don't buy this stock for one title. From a stock perspective, ATVI remains a top-three player, along with

Electronic Arts

(ERTS)

and

Midway

(MWY)

. Those are the only video game stocks you should have going into Christmas." (Alex. Brown has not done any underwriting for these companies.)

In the quarter ended June 30, Activision reported revenue of $8.1 million, up from $7 million one year earlier. Net income rose to $5.1 million, or 36 cents per share, from a loss of $2.6 million, or 19 cents a share, a year ago.

In what might be a bullish indicator, Kotick says the failure to squeeze

Apocalypse

into the third quarter will not "affect our guidance" to Wall Street. And Marcus says the company's deft ability to handle such delays is even further sign that Activision is looking good. "I'm actually feeling better and better about what's going on over there," says Marcus. "They're just really out there hiring good people, cutting good deals. Guidance does not get clearer than they give it."

So

Apocalypse

or not, perhaps Activision's stock price isn't in for such a wild ride after all.

This story was originally published Aug. 25, 1997.