Earnings Preview: Activision Blizzard

| About: Activision Blizzard, (ATVI)

Activision Blizzard (NASDAQ:ATVI) is expected to report Q1 earnings after the market close on Wednesday, May 9, with a conference call scheduled for 4:30 pm ET.


The consensus estimate is 4c for EPS and $555.93M for revenue, according to First Call. For Q1, Activision expects non-GAAP EPS of 3c on revenues of $525M. For FY12, Activision's non-GAAP EPS estimate is 94c on total revenue of $4.5B, consensus is 97c on $4.57B in revenue. Analysts covering the stock are cautiously optimistic about Activision due to the continuous decline in sales in the video game industry over the last few months. Lower than expected Call of Duty DLC sales and continuous loss of subscribers for World of Warcraft are the other factors that may limit the growth of the company. However, Activision's foray into the mobile gaming market is expected to be a long-term positive catalyst, notes Zacks. Despite these factors, analysts are optimistic about decent FY12 results based on Activision's release of Giants, the squeal of Skylanders, and Diablo III, due out next week. Moreover, the releases of Spider-Man, Tony Hawk, Transformers and Call of Duty Black Ops 2 will provide the necessary boost to the company's guided top-line and bottom-line figures, Zacks says.

Analyst Views

Citigroup is looking for non-GAAP EPS of 3c, non-GAAP revenue of $535M, and operating income of $48M. Based on intra-quarter channel checks and Citi's model sensitivity work, the firm views its Q1 estimates as reasonable, given strong DLC sales of Call of Duty & Skylanders toys, offset by the soft launches of PROTOTYPE 2.Citigroup rates the stock Buy with a $15 target.

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Tagged: , Multimedia & Graphics Software, Earnings
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