718877--6/9/2006--ACTIVISION_INC

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{customer, product, revenue}

{product, market, service}

{property, intellectual, protect}

{operation, international, foreign}

{product, liability, claim}

{operation, natural, condition}

{personnel, key, retain}

{tax, income, asset}

{provision, law, control}

{acquisition, growth, future}

{competitive, industry, competition}

{stock, price, operating}

{product, candidate, development}

{system, service, information}

Our business is subject to many risks and uncertainties, which may affect our future financial performance. If any of the events or circumstances described below occurs, our business and financial performance could be harmed, our actual results could differ materially from our expectations, and the market value of our securities could decline. We depend on a relatively small number of brands for a significant portion of our revenues and profits. Our future success depends on our ability to release popular products. If we are unable to maintain or acquire licenses to intellectual property, we may publish fewer hit titles and our revenue may decline. Transitions in console platforms could have a material impact on the market for interactive entertainment software. We must make significant expenditures to develop products for new platforms which may not be successful or released when anticipated. We are exposed to seasonality in the sale of our products. If the average price of current-generation titles continues to decline or if we are unable to sustain launch pricing on next-generation titles, our operating results will suffer. If we do not continue to attract and retain key personnel, we will be unable to effectively conduct our business. If our products contain defects, our business could be harmed significantly. We may permit our customers to return our products and to receive pricing concessions which could reduce our net revenues and results of operations. Inadequate intellectual property protections could prevent us from enforcing or defending our proprietary technology. We may be subject to intellectual property claims. We rely on independent third parties to develop some of our software products. Our industry is highly competitive We may face difficulty obtaining access to retail shelf space necessary to market and sell our products effectively. Our sales may decline substantially without warning and in a brief period of time because we do not have long-term contracts for the sale of our products. We may be burdened with payment defaults and uncollectible accounts if our distributors or retailers cannot honor their credit arrangement with us. We may not be able to maintain our distribution relationships with key vendors. Our international revenues may be subject to regulatory requirements as well as currency fluctuations. Our products may be subject to legal claims. We may face limitations on our ability to find suitable acquisition opportunities or to integrate additional acquired businesses. We are also required to pay taxes other than income taxes, such as payroll, sales, use, value-added, net worth, property, and goods and services taxes, in both the United States and various foreign jurisdictions. We are regularly under examination by tax authorities with respect to these non-income taxes. There can be no assurance that the outcomes from these examinations, changes in our business or changes in applicable tax rules will not have an adverse effect on our operating results and financial condition. Our shareholder rights plan, charter documents, and other agreements may make it more difficult to acquire us without the approval of our Board of Directors. Our stock price is highly volatile. Financial Information about Foreign and Domestic Operations and Export Sales

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718877--6/9/2006--ACTIVISION_INC_/NY