Activision Blizzard Inc.
) is scheduled to release its fiscal third quarter 2012 results
after the closing bell on November 7, 2012.
Prior Quarter Highlights
Activision reported robust second quarter 2012 results.
Revenues on non-GAAP basis surged 50.8% year over year to $1.05
billion in the quarter and comfortably exceeded the company's
guidance of $805.0 million. The quarterly revenues also surpassed
the Zacks Consensus Estimate of $893.0 million. The significant
year-over-year growth was driven by strong performances from
Diablo III, Skylanders, World of Warcraft and Call of Duty
Activision's bottom line also doubled to 20 cents in the
reported quarter boosted by higher revenue and solid margin
expansions. Including stock based compensation, earnings came at
For the third quarter, Activision expects non-GAAP earnings of
7 cents per share on revenues of $690 million. The Zacks
Consensus Estimate for revenue was $707 million.
For further details please read:
Activision's 2Q Profits Double Y/Y
Estimate Revision Trend
In the last 30 days, none out of the 5 analysts covering the
stock revised their estimates for the third quarter. The Zacks
Consensus Estimate for the quarter remained at 7 cents per share
for the same period of time.
Analysts expect Activision's top line to exceed estimates
banking on higher sales of World of Warcraft: Mists of Pandaria.
Moreover, the bottom line is expected to get a boost from
higher digital sales and share repurchase activity. However,
analysts remain concerned regarding the uncertain macroeconomic
conditions coupled with subscription losses in the World of
Warcraft game and weaker-than-expected sales from Call of Duty:
Black Ops II.
We note that Activision has a staggering average earnings
surprise of 217.7% over the past four quarters. We don't expect a
major change in the earnings trend pattern for the current
quarter. We believe that Activision is focusing on expanding its
product portfolio that will boost top-line growth over the long
Meanwhile, Activision continues to strengthen its World of
Warcraft, Call of Duty and Skylanders franchises through the
launch of new versions and content packs, which are expected to
boost top-line growth in the near term. Moreover, with video game
sales slowing down in the major western markets, Activision has
been focusing on boosting its presence in the emerging markets of
China and South East Asia.
However, softness in the video game industry and significant
Electronic Arts Inc.
Take-Two Interactive Software Inc.
) are the major headwinds going forward. Moreover, increasing
investment related to new product developments may hurt
profitability in the near term.
We prefer to remain on the sidelines due to these concerns and
maintain our Neutral recommendation over the long term (6-12
months). Currently, Activision Blizzard has a Zacks #3 Rank,
which implies a 'Hold' rating in the short term.
ACTIVISION BLZD (ATVI): Free Stock Analysis
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