Thursday, February 4, 2010

Activision Blizzard Inc. (NASDAQ: ATVI): Q4 Earnings Preview 2009

. Thursday, February 4, 2010

By Stock Wizard

Activision Blizzard Inc. (NASDAQ: ATVI) is scheduled to release fiscal fourth-quarter 2009 earnings after the closing bell on Wednesday, February 10, 2010. Analysts, on average, expect the company to report earnings of 44 cents a share on revenue of $2.23 billion. In the year ago quarter, the company reported earnings of 31 cents per share on revenue of $2.34 billion.

Activision Blizzard, Inc., through its subsidiaries, publishes online, personal computer, console, and hand-held games worldwide. The company develops and publishes video games, as well as maintains its proprietary online-game related service, It also publishes interactive software products and peripherals internationally. The company?s products cover various game categories, including action/adventure, action sports, racing, role-playing, simulation, first-person action, music, and strategy. Its products include Guitar Hero, Call of Duty, Tony Hawk, Spider-Man, X-Men, James Bond, and Transformers, as well as Diablo, StarCraft, Warcraft, and World of Warcraft.

In the preceding third quarter, the Santa Monica, California-based company posted net income of $15 million or $0.01 per share compared to a loss of $108 million or $0.08 per share, in the year-ago quarter. On an adjusted basis, the company earned 4 cents a share. Revenue for the quarter totaled $703 million. Analysts, on average, expected the company to report earnings of $0.04 per share on revenue of $724.04 million.

For the third quarter, Activision Blizzard increased its U.S. and European share 1.2 points over last year, across all platforms to 12.3% and had two of the top-10 best-selling titles in the U.S., Guitar Hero 5 and Guitar Hero World Tour, according to the NPD Group (U.S. data) and Charttrack and Gfk (European data).

For the fourth quarter, Activision Blizzard anticipates a GAAP loss of $0.04 per share, and non-GAAP earnings of $0.43 per share. GAAP net revenues are estimated to be $1.33 billion, and non-GAAP net revenues are expected to be $2.22 billion. For calendar year 2009, the company continues to expect GAAP earnings of $0.26 per share, and non-GAAP earnings of $0.63 per share. GAAP net revenues are estimated to be $4.05 billion, and non-GAAP net revenues are expected to be $4.50 billion.

In the fourth quarter of calendar year 2009, Activision Publishing released five holiday titles namely "Call of Duty: Modern Warfare 2" and "Tony Hawk: Ride" this month, as well as the already released "DJ Hero" and "Band Hero." In November, Activision Publishing released Infinity Ward's highly anticipated first-person action game Call of Duty: Modern Warfare 2 globally. According to its own internal estimates, Modern Warfare 2 racked up $550 million in its first five days on the market. In January, Video game publisher Activision Blizzard Inc. said that the game "Call of Duty: Modern Warfare 2" has brought in more than US$1 billion in revenue since it went on sale. "Call of Duty" has an edge over other games because of its online multi-player mode. New updates to the online version can give titles a longer shelf life. The company is poised to benefit from strong holiday sales.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 13.80 and PEG Ratio (5 yr expected) of 1.08. In terms of stock performance, Activision shares have gained 12 percent over the last year.

Full Disclosure: None.

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