Bloomberg News

Activision Blizzard Tops Estimates, Raises Full-Year View

August 03, 2012

Activision Blizzard Exceeds Estimates, Raises Full-Year Outlook

Activision Blizzard Inc. fell 0.4 percent to $11.77 at the close in New York. The stock is down 4.5 percent this year. Photographer: Patrick Fallon/Bloomberg

Activision Blizzard Inc. (ATVI:US), the video- game maker put up for sale by majority owner Vivendi SA (VIV), posted quarterly results that beat analysts’ estimates on gains from its “Skylanders” and “Diablo” titles.

Second-quarter profit, excluding items, totaled 20 cents a share, beating the 12-cent average of 19 analysts’ estimates (ATVI:US). Net income fell 45 percent to $185 million, or 16 cents a share, from $335 million, or 29 cents, a year ago, Activision,m the largest U.S. game publisher, said yesterday in a statement (ATVI:US).

Activision has weathered an industry slowdown in sales of packaged discs for games played on consoles by releasing additional content online for its shooter franchise “Call of Duty.” It’s also nurturing a new title called “Skylanders Spyro’s Adventure,” making both video games and action figures.

Second-quarter sales, excluding changes in deferred revenue, rose 51 percent to $1.05 billion and beat the $837 million average of 19 analysts’ estimates compiled by Bloomberg. Total revenue fell 6.2 percent to $1.08 billion. The company’s “World of Warcraft” multiplayer online game lost 1.1 million subscribers in the period, finishing at 9.1 million.

Michael Pachter, a Wedbush Securities analyst in Los Angeles, said the drop in “World of Warcraft” subscribers was unexpected. He has an “outperform” rating on the stock.

Activision fell 4.4 percent to $11.25 in extended trading. The stock lost 0.4 percent to $11.77 yesterday in New York and is down 4.5 percent this year.

Future Releases

With a new “World of Warcraft” scheduled for release on Sept. 25, the next “Skylanders” installment and a new “Call of Duty” going on sale later this year, Activision projected full-year sales, excluding changes in deferred revenue, to rise 3.1 percent to $4.63 billion. Analysts estimate $4.59 billion.

Profit, excluding items, will be 99 cents, according to the company, compared with analysts’ estimates of 98 cents. The company previously projected 95 cents and $4.53 billion.

“We think being prudent is the best path, and I think that’s what we’ve done with our guidance,” Chief Financial Officer Dennis Durkin said on a conference call.

For the third quarter, Activision forecasts $690 million in revenue and profit of 7 cents a share, on that basis, compared with analysts’ projections of a 12-cent profit and sales of $730.9 million.

In the past two years, the company has exceeded estimates for profit in every quarter and for sales in all but one, Bloomberg-compiled data show.

‘Skylanders’ Toys

In the first half of 2012, “Skylanders” toys were the top-selling action figures in the U.S., while the video games ranked among the top three titles, Chief Executive Officer Bobby Kotick said in the statement.

Activision, led by Kotick since 1992, is 61 percent owned by Paris-based Vivendi, also parent of Universal Music. The French company is under pressure from investors to boost its share price and Chairman Jean-Rene Fourtou on July 12 said ‘it’s a possibility’’ his company may sell Activision.

In July, Activision announced a multiyear partnership with Tencent Holdings Ltd. (700), an Internet services provider, to deliver a Chinese version of “Call of Duty” that is free to play and sells in-game items.

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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Companies Mentioned

  • ATVI
    (Activision Blizzard Inc)
    • $22.98 USD
    • -0.20
    • -0.89%
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