Activision decision to drop PC game prompts analysts' wrath. (Investments & Finance).

Video game maker Activision Inc. has Wall Street in a huff.

Last week the Santa Monica video game company, which makes the popular "Tony Hawk Pro Skater" series, confirmed that it terminated development on "Return to Castle Wolfenstein: Enemy Territory" for personal computers. (It will still release the title on the Xbox and Playstation 2 consoles.)

The move was troubling to analysts since the original "Castle Wolfenstein," released for PCs in November 2001, was Activision's second biggest franchise last year. The game contributed $31 million the company's annual revenue of $786 million that year, said Bill Lennan, an equity analyst with WR Hambrecht + Co. in San Francisco.

Lennan issued a note basically saying he was blindsided by the abrupt termination of a key release, and threatening to downgrade his existing "hold" rating to a "sell" if Activision doled out any additional bad news. At RBC Capital Markets, analyst Stewart Halpern went ahead with the cut, to "underperform" from "sector perform."

"It's not a lot of their revenues, but the issue with Activision right now is their ability to develop sustainable franchises beyond 'Tony Hawk' and 'Spider-Man: The Movie,"' Lennan said. "The financial impact is not enormous. To me the bigger issue is what it says about product development."

Officials from Activision did not return calls.

Activision has scored consistent hits with its "Tony Hawk" franchise, now in its fourth installment, but has yet to develop anything that would build on that success. In January, the company lowered its fiscal 2004 earnings guidance and scrapped nearly 30 percent of its new product slate. Analysts have expressed concern about the company's prospects as the "Tony Hawk" and "Spider-Man" series mature.

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