Activision Blizzard Shares Pop on Earnings Beat

Andrew Klips  |

Activision Blizzard, Inc. (ATVI) is seeing shares trade ahead on Friday with a more than $1 per share morning gap after beating street estimates for fourth-quarter earnings thanks to increased sales of its blockbuster Call of Duty and Skylanders titles.  The company tempered moods to a degree, however, with a cautious outlook for 2013.

For the most recent quarter, Activision reported net revenue of $1.77 billion, a 25 percent increase from the $1.41 billion in the year prior quarter.  On a non-GAAP basis, net revenues hit a record high of $2.60 billion versus $2.41 billion in Q4 2011.  GAAP profits totaled $354 million, or 31 cents per share, up from $99 million, or 8 cents per share in the year earlier quarter.  Excluding certain items, non-GAAP earnings were $891 million, or 78 cents per share, compared to $725 million, or 62 cents per share in the fourth quarter of 2011.

Both figures topped Wall Street analyst’s expectations of $2.44 billion in revenue and 72 cents per share in earnings.

For the complete year 2012, Activision posted a record GAAP net revenue of $4.86 billion, compared to $4.76 billion in 2011.  Adjusted earnings for the whole year were also an all-time high of $1.18 per share, 25 cents higher than 2011’s EPS.

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According to The NPD Group, GfK Chart-Track and Activision Blizzard internal estimates, including toys and accessories, in North America and Europe combined Activision Publishing was the #1 console and handheld publisher for 2012 with the #1 and #3 best-selling franchise, Call of Duty and Skylanders.  In November 2012, the company’s Black Ops II became the first video game ever to cross the $1 billion mark in 15-days.

“We are very pleased to report that Activision Blizzard delivered the best performance in its history. With better-than-expected net revenues, record operating margins and record earnings, and over $1.3 billion in operating cash flow, we continue to set the industry success bar,” said Bobby Kotick, chief executive of Activision Blizzard.

Citing a “challenging global economy” and a difficult year to compete with, the company does not expect to set new records in 2013.  The video game maker expects first quarter EPS of 10 cents a share, basically in line with analyst predictions. Q1 2013 revenue is estimated to be $690 million, short of the $710.5 million analysts called-for.  For all of 2013, Activision Blizzard forecasts profits of 80 cents per share and revenue of $4.18 billion, short of the 96 cents EPS on $4.56 billion in revenue that Wall Street was expecting.

Shares of ATVI were flat for the past 52 weeks, but today’s run has taken the stock price to its highest levels since November 2011.  Around the lunch break, the stock is trading at $13.40 per share, ahead by 11.5 percent for the day.

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