Activision Blizzard Inc. (ATVI:US), the largest U.S. video-game maker, posted third-quarter profit that beat analysts’ estimates on gains from its “Skylanders” and “Diablo” titles. The fourth-quarter forecast exceeded views.
Net income rose 53 percent to $226 million, or 20 cents a share, from $148 million, or 13 cents, a year earlier, the Santa Monica, California-based company said yesterday in a statement. Excluding items, profit of 15 cents beat the 8-cent average estimate (ATVI:US) of 24 analysts compiled by Bloomberg.
Activision has weathered an industry decline by nurturing existing blockbusters and developing new ones. “World of Warcraft: Mists of Pandaria” helped the company gain about 1 million online subscribers in the quarter, while “Diablo III” remained a best-selling PC game, the company said. For the first nine months of the year, “Skylanders Spyro’s Adventures” generated the most revenue of any console game, when accessories like action figures are included.
“In a very challenging environment, we executed very, very well,” Chief Executive Officer Bobby Kotick said in an interview.
Third-quarter sales, excluding changes in deferred revenue, rose 20 percent to $751 million and beat the $710.2 million average estimate.
Activision rose (ATVI:US) 0.7 percent to $11.21 at 9:56 a.m. in New York trading. Through yesterday the shares had lost 9.7 percent this year.
The company projected fourth-quarter sales (ATVI:US), excluding changes in deferred revenue, to reach $2.41 billion, exceeding analysts’ estimates of $2.34 billion, and profit of 70 cents a share, compared with estimates of 67 cents.
Activision will release “Call of Duty: Black Ops II” on Nov. 13, the latest in the top-selling series. “Skylanders Giants,” released last month, has delivered strong early sales, Kotick said.
The new game probably sold 324,000 software units during its first two weeks, said Michael Olson, an analyst with Piper Jaffray Cos. who has an overweight rating on the shares. “Skylanders Giants” may deliver more than 12 percent of revenue in the current quarter, while “Call of Duty” will deliver 70 percent of sales, Olson estimated yesterday in a report.
The original “Skylanders,” which came out in October 2011, sold 86,000 units in the its first two weeks, he estimated.
Kotick tempered the optimism by saying sales next year may be hurt by global economic turmoil, a rise in games that are free to play and state and local sales-tax increases that reduce consumer purchasing power.
“There continues to be more, low-cost or free ways to entertain yourself,” he said. “And there are a lot of choices that people have to make with their discretionary spending.”
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 in July said “it’s a possibility” his company may sell Activision.
Kotick declined to comment on the status of relations with Vivendi.
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