- Skylanders, retooled Guitar Hero come up short for holidays
- Focus after King Digital purchase will be debt repayment
Activision Blizzard Inc. reported fourth-quarter revenue and profit that fell short of analysts’ estimates, in part due to lower-than-expected purchases of its Skylanders and Guitar Hero video games. The stock plunged in extended trading.
Earnings excluding some items fell to 83 cents a share, the largest U.S. video-game maker said Thursday in a statement, less than the 86-cent average of analysts’ estimates compiled by Bloomberg. Sales, also on an adjusted basis, slumped 4.3 percent to $2.12 billion, below estimates of $2.2 billion. Activision expects to complete its $5.9 billion acquisition of King Digital Entertainment Plc shortly.
“With our expected closing of King Digital later this month, we will have the largest game network in the world, with over 500 million users playing our games every month,” Chief Executive Officer Bobby Kotick said in the statement.
The company plans to focus on debt repayment once the King Digital deal is completed, executives said on a conference call. Activision plans to repay $1.5 billion in debt during the year. The gamemaker closed out 2015 with long-term debt of $4.08 billion.
Activision plunged as much as 20 percent on the news. It fell to $26.25 in extended trading and was as low as $24.27. The stock had closed at $30.52 in New York on Thursday.
Skylanders, which combines video-game play with collectible figures, fell short due to increased competition, the Santa Monica, California-based company said. Walt Disney Co. featured “Star Wars” figures in its Infinity game for the first time last year. Nintendo Co. expanded its Amiibo line-up and Warner Bros. introduced Lego Dimensions.
Guitar Hero Live, the reintroduction of a music-themed game first released in 2005, didn’t connect as well with consumers who are now used to playing on mobile devices, the company said. The game, which challenges players to hit notes on a toy guitar along while watching music videos, was playable for the first time on tablets and smartphones last year.
- For the first quarter, Activision forecasts adjusted earnings of 11 cents a share. That may not compare to analysts’ estimates because of the pending acquisition of King Digital.
- Adjusted first-quarter sales will be $800 million.
- For the year, Activision sees adjusted earnings of $1.75 a share on revenue of $6.25 billion, compared with Wall Street projections of $2.05 a share and sales of $6.51 billion, including King Digital.
- Net income for the fourth quarter fell 56 percent to $159 million, or 21 cents a share.
Activision said several key franchises continue to perform well, including the latest installment of Call of Duty, which saw revenue climb in double-digit percentages, and Hearthstone: Heroes of Warcraft, which passed 40 million registered players in the quarter.