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- ATVI impressed on earnings, owing largely to strong future expansion predictions.
- It may be the first US video game company to solve the $8B riddle of the Chinese PC gaming market.
- Warcraft set to post two straight quarters of subscription growth, thanks to Draenor expansion.
Activision Q3 2014 Review: Solid Results On Destiny; Call Of Duty To Drive Q4WestEnd511 • Wed, Nov. 12
- ATVI reported a solid beat on both EPS and EBITDA.
- Destiny and WoW continue to attract subs.
- Q4 pipeline looks promising. I reiterate my bullish view.
Activison Blizzard Returns Year After Year For Gamers And Investors
- ATVI has been paying and increasing dividend payments since 2011.
- ATVI's total return for investors has outpaced its industry by a comfortable margin.
- The diversity of its franchises adds a margin of safety for the company in terms of sales and investors in terms of earnings.
- ATVI continues to beat earnings estimates set by analysts.
- ATVI has a plan and is making great strides in expanding to different sources of revenues.
- Activision Blizzard reported solid third quarter results along with an increased full year guidance.
- Fourth quarter guidance may prove to be conservative.
- Activision faces easy comps in the first half of 2015.
- ATVI beats again on earnings thanks to the success of Destiny, Hearthstone, and Warcraft.
- Warcraft's subscription boost is positive indicator as Warlords of Draenor expansion looms.
- Revenue, profit beat lead to increased year-end estimates to $4.8 billion in revenue.
Update: Activision Earnings - The Q4 Guidance Offers Major Upside Once Again
- Strong Q3 results. “World of Warcraft” subscribers unexpectedly increase.
- Activision raises its FY outlook but fails to impress, notably at the top-line level with a $4.8B guide while I expected a more aggressive upgrade ($4.9-5.0B).
- The Q4 guidance does not make any sense as it points to a 3% revenue decline Y/Y. Activision is managing consensus expectations in order to deliver a strong beat again.
Here's The Blockbuster Game Activision Blizzard Is Banking On
- Activision Blizzard is set to report third quarter earnings on Tuesday, November 4 after the market closes.
- So far this has been a great earnings season for the large video game producers.
- Analysts on Estimize and Wall Street are both expecting a huge uptick in Activision Blizzard's 3rd fiscal quarter, although the Estimize community is significantly more bullish on the bottom line than the Street is.
Activision: Fiscal Year Guidance Likely To Be Upgraded On Nov. 4
- Q3 (due Nov. 4) will be strong but this is already priced in.
- The focus will be on Q4 / FY guidance.
- Consensus expects 3% top-line growth in Q4. Such a weak revenue growth in the holiday season does not make sense.
- I believe that Activision could guide for double digit revenue growth in Q4.
Activision: A Likely Winner Of The Holiday Season, Recent Dip A Buying Opportunity
- The competitive environment will be pretty soft in the crucial holiday season and, in my view, Activision will have the strongest lineup.
- The Street's expectation of 5% revenue growth in Q4 appears overly conservative.
- The recent concerns are overdone; the sell-off is a buying opportunity.
With Cameras Rolling, Worlds Inc. Battles Activision Blizzard October 3
- Camera's In the Court Room to "STREAM" patent infringement Markman Hearing.
- 3-D Online Multi-Player Patent Holder Worlds Inc won't feel the pinch of trial costs all the way to the US Supreme Court; courtesy of Susman Godfrey.
- Investors get unfiltered video access of key legal events In Worlds v. Activision Blizzard.
- Supposedly "World of Warcraft's" successor, ATVI's "Titan" has officially been cancelled.
- Ends 4 years, $140 million of investment and development for a game that wasn't "fun".
- Results in another setback in what was supposed to be the "biggest second half ever".
- ATVI's "Destiny" rakes in $325M in initial sales, below the initial $500M reports.
- Mixed reviews on the game largely due to "conventional" play and lack of open world depth.
- Stock price slips roughly 10% over last two weeks, might be a cheap pick-up come earnings time?
Activision's Destiny Is A Hit, But Critics Cite Lack Of Content
- Destiny rakes in $500 million in revenue during the 24 hours after its launch.
- Some analysts see Destiny making almost $1 billion in sales during 2014.
- The upcoming holiday season could see a continued surge in Destiny sales, which would be huge for Activision as it adds a new franchise to the portfolio.
- Reviews of Destiny have been lackluster, which is major concern considering how well the game has sold.
- Bad reviews could take out Destiny's "legs" in regards to future sales.
ATVI: What Does Patch 2.1 Mean To The Diablo Franchise
- ATVI recently released the much anticipated patch 2.1 for Diablo 3 Reaper of Souls.
- This software update is important to the extent that it illustrates the company's willingness to alter a product after release to better match customer demand.
- I expect the patch to have a favorable impact on the company's ability to sell future DLC.
- The patch further addresses the criticism the game has been subjected to.
Is Activision Blizzard Relying Entirely On Destiny To Fix Things?
- The company’s revenues were pretty weak and do not justify the present market price unless we assume that sales from Destiny cover up the current weakness in the future.
- The EPS would receive a double blow from the deteriorating top and bottom lines in addition to the expected drop in share repurchases.
- Despite the deteriorating top and bottom lines management of the company continues to receive hefty rewards.
Why Activision Blizzard Is Still Supporting Its Dying Flagship Franchise
- WoW still generates a bulk of ATVI's revenues.
- The franchise still holds the highest amount of subscribers, even though the franchise is a decade old.
- Free-to-play has been discussed.
- The core users have revealed themselves, and are the key to the franchise's longevity.
- According to the company’s latest news, management expects fine growth and a record full-year non-GAAP EPS in 2014.
- Activision Blizzard reported net revenues of $0.970 billion for the three-month quarter ended June 30, 2014, compared to net revenues of $1.1 billion year over year.
- The launch of new gaming consoles from major producers like Sony and Microsoft is another important indicator of future sales. This is particularly important for the sale of these consoles.
- The recent dividend of $0.20 per share (or 23% payout ratio) was the highest in the history of the company.
- The company still has upward potential.
- Destiny is the first major release by Bungie with Activision and is incredibly highly anticipated.
- Call of Duty: Advanced Warfare is slated to be another blockbuster release in the series this year.
- Sales similar to Take Two’s GTA V last year could propel the stock price, creating a strong buy opportunity.
Thu, Nov. 20, 12:06 PM
- After announcing yesterday afternoon World of Warcraft: Warlords of Draenor had sold 3.3M+ copies following 24 hours of availability, Activision (NASDAQ:ATVI) announced today Call of Duty: Advanced Warfare (launched on Nov. 3) "is the biggest entertainment launch of the year, besting not only all other video games, but also the biggest movies, music and books launched in 2014."
- Activision adds Advanced Warfare is " the highest-selling digital launch in console history according to Xbox Live, PlayStation Network and internal Activision estimates," and that users played an estimated 370M+ online matches in the week following the game's release.
- Also: Activision says the company has settled a class-action suit related to last year's leveraged recap deal with Vivendi. "Various defendants" and insurance companies will pay $275M.
- Piper (Overweight) thinks the Warcraft and Call of Duty announcements suggest upside to Q4 estimates.
Wed, Nov. 19, 5:53 PM
- Activision (NASDAQ:ATVI) reports over 3.3M copies of World of Warcraft: Warlords of Draenor were sold following the first 24 hours of availability following yesterday's launch. As a result, the WoW subscriber base, which stood at 7.4M at the end of Q3, is back above 10M.
- Draenor, the fifth expansion for WoW, is sold through a $50 standard edition and a $70 deluxe edition. It launched yesterday in North America and Europe (among other places), and is launching today in China and Korea. NetEase (NASDAQ:NTES) remains Activision's Chinese WoW partner.
- While reviews have mostly been positive, initial Draenor users have complained about overtaxed servers. Activision/Blizzard is giving them five days of free subscription time to make up for it.
- ATVI +1.2% AH.
Fri, Nov. 14, 5:35 PM
- After coming in at #1 in NPD's September U.S. retail video game rankings (following a blockbuster Sep. 9 launch), Activision's (NASDAQ:ATVI) Destiny fell to #5 in October. Take-Two's (NASDAQ:TTWO) NBA 2K15, which launched on Oct. 7, took its place at the top.
- Borderlands: The Pre-Sequel, launched by Take-Two on Oct. 14, was #4. Skylanders Trap Team, which Activision released on Oct. 2, was #6.
- Electronic Arts' (NASDAQ:EA) FIFA 15 and Madden NFL 15 were #7 and #8, down from #3 and #2 in September. The Sims 4 fell out of the top-10, as did Activision's Diablo III: Reaper of Souls.
- Altogether, NPD estimates U.S. physical retail game sales fell 27% Y/Y to $350.3M. They were down 36% in September, thanks in part to tough comps caused by last year's GTA V launch. Xbox One/PS4 demand led console sales to rise 59% to $273.6M; Microsoft cut One prices by $50 early in November.
- The digital transition continues: SuperData Research estimates U.S. digital game spending rose 12% Y/Y in October to $957M.
- Activision's Call of Duty: Advanced Warfare launched on Nov. 3, and should be at or near the top of NPD's November rankings. Metacritic gives the game a score of 77/100.
- ATVI -1.2% in regular trading. TTWO +2.5%. EA +0.1%.
Tue, Nov. 11, 6:59 AM
Wed, Nov. 5, 9:16 AM
- Gainers: CRTO +19%. JIVE +17%. YOD +16%. TTPH +12%. IBIO +11%. AEZS +9%. EXEL +8%. CLNY +7%. ANR +7%. ROYT +7%. EOG +6%. PHMD +6%. NICE +6%. VPCO +6%. ATVI +5%. VG +5%. CTSH +5%. WLT +5%. MACK +5%.
- Losers: CHUY -24%. NUS -22%. FEYE -16%. ZU -14%. TRIP -13%. SSYS -8%. MEMP -7%. NG -6%. ANV -6%. ARIA -6%. AWAY -6%.
Tue, Nov. 4, 4:42 PM
- Though it beat Q3 estimates, Activision (NASDAQ:ATVI) is guiding for Q4 revenue of $2.2B and EPS of $0.86, below a consensus of $2.34B and $0.94.
- The World of Warcraft sub base rose by 600K Q/Q in Q3 to 7.4M, a reversal from Q2's 800K decline. Hearthstone registered users have topped 20M, and Destiny registered users 9.5M.
- 43% of revenue came from digital channels, 50% from retail channels, and 7% from distribution.
- 40% of revenue came from next-gen consoles, 24% of older consoles, 18% from online gaming/content, 8% from PC games, 7% from distribution, and 3% from mobile games and other sources. Online revenue rose 15% Y/Y to $209M; mobile/other revenue fell 36% to $35M.
- GAAP costs/expenses rose 20% Y/Y to $745M, thanks in part to a 53% increase in sales/marketing spend to $221M.
- Q3 results, PR
Tue, Nov. 4, 4:12 PM| 4 Comments
Mon, Nov. 3, 5:35 PM
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Fri, Oct. 31, 5:28 PM
- Sony (SNE +5.8%) sold 3.3M PlayStation 4 units in calendar Q3, up from 2.7M in Q2 and easily outpacing the 2.4M Xboxes sold by Microsoft in Q3. In addition, Sony reported its gaming unit posted a $195M profit, up from $43M in Q2 thanks to rising PS4 game royalties.
- VG Chartz estimates Sony has cumulatively sold 12.3M PS4 units since last fall, and Microsoft 6.1M Xbox One units. To boost sales, Microsoft recently slashed Xbox One prices by $50 - starting Nov. 2, the One sells for $349 without a Kinect, and $449 with one.
- Electronic Arts (EA +2.8%), Activision (ATVI +1.9%), and Take-Two (TTWO +4.7%) outperformed again today. All three game developers rallied yesterday after Take-Two posted a big FQ2 beat on the back of strong sales for Grand Theft Auto V, NBA 2K14, and Borderlands 2. EA jumped thanks to an FQ2 beat and strong EPS guidance the day before.
- GameStop (GME +1.5%) and PS4 CPU/GPU supplier AMD (AMD +1.8%) are likely also happy with Sony's PS4 sales figure.
Fri, Oct. 17, 1:55 PM
- With last year's Grand Theft Auto V (TTWO +0.3%) launch skewing comps, NPD estimates U.S. physical retail video game sales fell 36% Y/Y in September to $481.2M, a worse decline than August's 21% drop.
- The ongoing spending shift towards digital channels naturally contributed to the drop as well: SuperData Research estimates digital game spend rose 8.6% Y/Y in September to $873M.
- Hardware spend rose 136% Y/Y (up from August's 116%) thanks to next-gen console demand: NPD thinks PS4 sales nearly tripled from August levels with the help of Sony's (SNE +1.8%) Destiny bundle, and outpaced Xbox One sales yet again. GameStop (GME +2.7%) investors approve of the numbers.
- Electronic Arts (EA +4.5%) is rallying after Madden NFL 15, FIFA 15, NHL 15, and The Sims 4 respectively came in at #2, #3, #6, and #8 on NPD's top-10 list. Of the four games, only Madden was on the August list (#1 in its launch month). Battlefield 4 (#9 in August) fell out of the top-10.
- As expected, Activision's (ATVI -0.5%) Destiny was #1. But Diablo III: Reaper of Souls fell to #10 from #2, and Call of Duty: Ghosts (#5 in August) dropped out of the top-10. Activision, like Take-Two, is sitting out a market rally.
- EA reports on Oct. 28, Take-Two on Oct. 29, Sony on Oct. 31, and Activision on Nov. 4.
Tue, Oct. 14, 1:19 PM| Comment!
Tue, Sep. 23, 1:49 PM
- Following multiple delays, Activision's (ATVI -1.6%) Blizzard unit has pulled the plug on developing Titan, a next-gen MMORPG viewed as the successor to the World of Warcraft cash cow.
- Blizzard CEO Mike Morhaime: "We didn't find the fun ... We didn't find the passion. We talked about how we put it through a reevaluation period, and actually, what we reevaluated is whether that's the game we really wanted to be making. The answer is no."
- As it is, VentureBeat reported last year Activision had "decided to push the reset button" on Titan, and that the game wasn't set to launch before 2016 at the earliest. Blizzard SVP Chris Metzen says a "sense of inertia and obligation and identity that we hold in ourselves and the community may also hold toward us" compelled Blizzard to try and make a new MMORPG, before ultimately changing its mind.
- Metzen adds the popularity of smaller Blizzard releases such as Hearthstone and Heroes of the Storm contributed to its decision. "I think the lesson that comes around again is just making damn sure that the things we commit to do ... are coming from a place of focus and inspiration."
- Activision's move comes as the Warcraft base continues declining: It declined by 800K in Q2 to 6.8M. Meanwhile, first-person shooter Destiny, which Activision hopes will be its next billion-dollar franchise (joining Call of Duty and Skylanders), recently produced first-day sales of ~$500M.
Wed, Sep. 10, 11:00 AM
- After going on sale at more than 11,000 midnight openings around the world yesterday, Activision (ATVI -1.6%) says its new shooter title, Destiny, generated $500M in revenue in its first day.
- At $60 a copy, it was the most pre-ordered game in history that wasn’t a sequel, says Cowen Research analyst Doug Creutz. Destiny is expected to draw 10M players on its first day, following the record 4.6M that tested the beta release in July.
- Activision is spending as much as $500M to develop and market Destiny, resulting in it being one of the most expensive games ever to hit the industry.
Tue, Sep. 9, 7:52 AM
- A channel check from Cowen Research analyst Doug Creutz indicates video game console/handheld software sales fell 10% Y/Y in August.
- The monthly tally would look even worse if not for the positive comp delivered by this year's Madden NFL game.
- Related stocks GameStop (NYSE:GME), Electronic Arts (NASDAQ:EA), Take-Two Interactive (NASDAQ:TTWO), and Activision Blizzard (NASDAQ:ATVI).
Fri, Aug. 29, 11:29 AM
- Take-Two (TTWO +4.1%) president Karl Slatoff says his company is weighing the pros and cons of bringing Grand Theft Auto to the big screen. He adds Take-Two doesn't think a weak box office showing would hurt the GTA game franchise.
- Dan Houser, the co-founder of GTA developer Rockstar Games, also appears open to doing a GTA movie. However, he insists Rockstar would want to make the film on its own.
- Benchmark's Mike Hickey thinks a GTA film makes sense, and that it could compel Activision (ATVI +0.3%), rumored to be hatching plans for its own movie studio, to acquire Take-Two.
- Hickey calls an Activision/Take-Two deal a "no-brainer," given Take-Two's developer talent, IP, and low valuation. He notes Activision can lower its business volatility by staggering Rockstar, Bungie, and Blizzard releases, and that Take-Two could help offset World of Warcraft's ongoing decline and Skylanders competition from Disney.
Tue, Aug. 12, 1:56 PM
- Activision (ATVI -0.1%) plans to offer the upcoming Skylanders: Trap Team on the iPad and Android tablets. Like console-based Skylanders games, the tablet versions of Trap Team will interact with Bluetooth-enabled "portals" that allow action figures placed on them to appear on screen.
- A Trap Team tablet starter kit will feature a portal, two action figures, a Bluetooth controller, and a stand, among other things. Like its console counterparts, it will retail for $74.99 when it goes on sale in October.
- The Skylanders franchise remains a cash cow for Activision: The company noted in its Q2 report Skylanders: Swap Force was the #2 console/handheld game in North America and Europe in 1H14, and that it also "outsold the #1 action figure line."
- Mobile, on the other hand, has been a weak spot for Activision: The company's mobile/other revenue fell 34% Y/Y in Q2 to just $59M.
ATVI vs. ETF Alternatives
Activision Blizzard Inc is an online, personal computer, video game console, tablet, handheld, and mobile game publisher. It has three operating segments: - Activision Publishing, Inc., Blizzard Entertainment, Inc. and Activision Blizzard Distribution.
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