Activision Blizzard 2Q earnings rise 53 percent
Thursday, August 4, 2011
NEW YORK (AP) — Video game publisher Activision Blizzard Inc. said Wednesday that its second-quarter net income grew 53 percent, boosted by strong demand for digital offerings such as downloadable content for its popular “Call of Duty” games.
Activision earned $335 million, or 29 cents per share, in the April-June period. That’s up 53 percent from $219 million, or 17 cents per share, in the same period a year earlier.
Revenue climbed 19 percent to $1.15 billion from $967 million.
On an adjusted basis Activision earned 10 cents per share, double what Wall Street expected. Adjusted revenue grew 2 percent to $699 million from $683 million last year. Analysts expected adjusted revenue of $601.9 million, according to FactSet.
The adjusted results exclude special items and account for the effects of deferring revenue and the related cost of sales for games with online components. Like other video game publishers, Activision spreads these out on its books over time, while the game is played, rather than all at once.
CEO Bobby Kotick called the quarter “phenomenal” and said Activision’s focus continues to be investing in online services and its games’ online capabilities. Of the company’s total revenue, $423 million came from digital channels, such as monthly subscription fees for “World of Warcraft,” downloadable content and games for mobile devices.
Activision’s forecast for the current quarter fell shy of Wall Street’s expectations, but the company raised its outlook for the full year. The fourth quarter is usually the most important one for video game companies because it includes holiday sales. Activision will launch the next version of its best-selling “Call of Duty” series in the fall.
The company now expects adjusted earnings for the year of 77 cents per share, up from its earlier outlook of 73 cents. Analysts predict 75 cents. Activision raised its 2011 adjusted revenue guidance to $4.05 billion from $3.95 billion. Analysts expect $4.06 billion.
Activision, based in Santa Monica, Calif., tends to give conservative guidance that it can later raise or beat. Its guidance for the current quarter is for adjusted earnings of a penny per share on revenue of $530 million. That’s below Wall Street’s estimates for 8 cents per share in earnings and $636.6 million in revenue.
The company said it has a very light game-release schedule in the current quarter compared with last year, when it launched blockbusters like “StarCraft 2” as well as a “Guitar Hero” and a “Spiderman” game. It only has one big game release, “X-Men: Destiny” in the third quarter of this year.
The fourth quarter, however, will be a big one for the company if all goes as planned. “Call of Duty: Modern Warfare 3” launches on Nov. 8, and Activision said pre-orders for the game are “significantly” higher than they were for its predecessor at this time. That game, “Call of Duty: Black Ops” broke entertainment industry records when it launched last year and made $1 billion in just six weeks in stores.
The company is also launching the full version of its online service for “Call of Duty,” called “Call of Duty: Elite.” The service, currently available in a “beta” test version, expands on what players already do online and helps them form groups, compete by skill level or share game stats. Eric Hirshberg, CEO of Activision Publishing, said in a conference call with analysts that “Elite” should “reset the bar” for multiplayer games.
Activision also has high hopes for “Skylanders: Spyro’s Adventure,” a game aimed mainly at boys aged 6 to 11 that combines real-life toys with online interactions. The game “truly defies categorization and creates an entirely new genre of play bringing the world of toys and video games of the Internet together like never before,” Hirshberg said.
Shares rose 22 cents, or 1.9 percent, to $12.01 in after-hours trading. They closed 13 cents higher at $11.82 in the regular session.
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