Video game stocks got hammered Wednesday morning after Activision ( ATVI) cut quarterly and yearly earnings estimates Tuesday night, citing weaker-than-expected holiday sales. Activision shares led the decline, dropping 21.2% to $12.40, touching a new 52-week low. THQ ( THQI) tanked 7.6% to $13.67. Acclaim Entertainment ( AKLM) lost 6.6% to 85 cents. Midway ( MWY) fell 13.5% to $4.75. Take-Two Interactive, which
raised its guidance Monday, got whacked nonetheless. Shares of Take-Two fell 6.2% to $23.07. Electronic Arts ( ERTS) lost 3.6% to $57.73. Activision's news follows Chief Executive Bobby Kotick's statements at the end of the fiscal second quarter that the company would likely have its "best year ever" next year. At that time, the company raised earnings and sales guidance for the next several quarters. The company behind the Spider-Man and Tony Hawk skateboarding games reduced third-quarter earnings estimates to 60 cents a share on revenue of $362 million, compared with earlier expectations of 82 cents a share on revenue of $435 million. Wall Street analysts polled by Thomson Financial/First Call expected the company to earn 77 cents on revenue of $420 million. For the fiscal fourth quarter, the company said it expects to post a loss of 15 cents a share on revenue of $100 million, compared with earlier expectations of a profit of 2 cents a share on revenue of $139 million. For its fiscal year 2003, the company pared down earnings expectations to 88 cents a share on revenue of $823 million. Earlier, executives told investors the company planned to achieve earnings of $1.29 a share on sales of $934 million. For its fiscal year 2004, Activision expects to post earnings per share of 80 cents on flat revenue of $823 million. Several Wall Street analysts have cut their estimates on Activision and other gaming stocks in recent weeks, after industry sales figures showed tepid growth in November.