Activision Hit by 'Quake' Delay

Updated from 2:52 p.m. EDT

Activision ( ATVI) is delaying the release of a key video game title, marking another setback to what is already expected to be an off year.

The video game publisher and its partner Id Software are pushing back the release of Enemy Territory: Quake Wars from Activision's current second fiscal quarter to sometime next year. Activision doesn't have a new release date for the title, which was expected to be the only PC-only game it released this year, company spokesman Ashley Dyer said.

"With Id, it's always, whenever it's ready," Dyer said.

Paul Wedgewood, owner of game studio Splash Damage, which is co-developing the game with Id, announced the delay earlier this week in a blog entry on the GameSpy Web site. The developers decided to push back the release of the game, which will be a multiplayer first-person-shooter title, to give themselves more time to get it right, Wedgewood said.

"To ensure the quality we want, we've decided to push the release out of 2006 to allow for extended testing, feedback and game balancing," Wedgewood said in the blog entry.

"Game balancing," Wedgewood went on to explain, has to do with trying to even up the abilities, weapons and tools of different players in the game so one doesn't have a decided advantage over others.

Representatives for Splash and Id didn't immediately return an email requesting comment.

Activision has not given guidance for its second quarter, and Dyer did not know what the financial impact of the delay would be. But the Quake series in particular and Id's games in general, which include the Doom franchise, have been big sellers for Activision in the past.

Wall Street analysts had predicted that Activision would lose 3 cents a share on sales of $160.8 million in its second quarter, which ends in September. But the Street will likely ratchet down those estimates due to the delay, said American Technology Research analyst P.J. McNealy in a research note on Wednesday.

"We view today's news as a negative for ATVI, and another misstep after ATVI's problems last holiday" when the company fell far short of analysts' earnings estimates due to weak overall demand, said McNealy, whose firm does not do investment banking.

In response to the weakening conditions, Activision plans to sharply curtail its number of game releases this year. The company expects the market -- and its sales -- to pick back up next year.

Despite the delay, McNealy remains positive on Activision, maintaining his buy rating.

"We believe investors should be buying ATVI and the other publishers while expectations are low," he said.

Shares of Activision, which traded near $15 in early May, were recently off 4 cents to $10.68. The company's shares, like that of the other video game publishers, are trading near their 52-week low amid a difficult transition to new video game technology.

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