Activision Blizzard Inc. (ATVI), the largest U.S. video-game publisher, posted fourth-quarter profit that beat analysts’ estimates on sales of the “Call of Duty” series. The stock reached the highest in at least 20 years.
Profit, excluding items, grew to 79 cents a share in the period ended Dec. 31, Santa Monica, California-based Activision said in a statement yesterday. That beat the 73-cent average of 24 analysts’ estimates compiled by Bloomberg. Adjusted revenue of $2.27 billion topped projections of $2.22 billion.
Sales and profit, down from a year ago, reflect the two-year drop in spending on traditional video games as more consumers play on mobile devices. Activision’s shooter title “Call of Duty” and “Skylanders,” which combines a video game with collectible toys, helped the company weather the transition to new consoles from Microsoft Corp. (MSFT) and Sony Corp. (6758) and a drop in sales of games for older machines.
The full-year outlook implies “a nice recovery” in the second half, driven by the upcoming title “Destiny” and games for new consoles, Michael Olson and Andrew Connor, analysts at Piper Jaffray Cos. in Minneapolis, said in a note yesterday.
“We remain well-positioned to pursue the many opportunities throughout all interactive entertainment, whether new business models, new platforms, new geographies or new genres,” Chief Executive Officer Bobby Kotick said on a conference call. “The new consoles should be a catalyst for growth and margin expansion over the next two to three years as the installed base grows.”
Profit this quarter will be 9 cents a share, excluding items, the company said. That’s less than the 11-cent average of analysts’ estimates. Activision forecast sales of $675 million, excluding changes in deferred revenue, below the $688.8 million average of estimates.
For the year, the company forecasts adjusted sales of $4.6 billion and profit of $1.26 a share, excluding items. That’s in line with the average of estimates compiled by Bloomberg.
As of Dec. 31, “Skylanders” generated more than $2 billion in worldwide revenue, after selling about 175 million toys worldwide. Activision said it expects its “Destiny” action game, coming in September, to be the next billion-dollar title.
Fourth-quarter net income fell 51 percent to $174 million, or 22 cents a share, from a year earlier. Total revenue, including changes in deferred revenue, declined 14 percent to $1.52 billion.
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