Activision Blizzard Profit Tops View, Cuts Q4 Outlook

(RTTNews) - Activision Blizzard Inc. (ATVI) Wednesday reported a lower profit for the third quarter, hurt mainly by a drop in revenues. Nonetheless, the video game publisher's profit easily surpassed Wall Street expectations, as did revenues.

Moving ahead, Activision Blizzard lowered its adjusted outlook for the fourth-quarter, which is expected to miss current expectations. The company, however, lifted its guidance for the full year.

Santa Monica, California-based Activision's third-quarter profit dropped to $56 million or $0.05 per share from $226 million or $0.20 per share last year.

Adjusted earnings, which excludes one-time items, for the quarter dropped to $0.08 per share from $0.15 per share a year ago. On average, 23 analysts polled by Thomson Reuters estimated earnings of $0.03 per share for the quarter. Analysts' estimates typically exclude special items.

Third-quarter revenues dropped to $691 million from $841 million last year. Adjusted revenues, which exclude effects of change in deferred revenues, dropped to $657 million from $751 million. Analysts expected revenues of $589.43 million for the quarter.

The drop in revenues and profit indicate the absence of any major mobile games from Activision, as the company, unlike its main rival Electronic Arts, focuses mainly on games for consoles and PCs. The maker of hit "Call of Duty" and "World of Warcraft" titles are faced with change in consumer preference, as more and more gamers now seek the low-ticket mobile games.

The company released the next version of its blockbuster shooter game "Call of Duty: Ghosts" and toy-based game "Skylanders SWAP Force" during the current quarter.

Commenting on the new releases, Chief Executive Bobby Kotick said, "We are thrilled by the quality of those games and we are excited to show what we can do with them on next-generation consoles in the coming weeks."

The gaming industry expects the launch of Xbox One and Playstation 4 in the coming weeks, which are expected to drive gamers to buy new titles during the holiday season.

The company in a statement revealed the sale of more than $1 billion copies of the latest "Call of Duty" to retailers on the first day.

For the the fourth quarter, Activision Blizzard now expect earnings of $0.05 per share, adjusted earnings of $0.72 per share, revenues of $1.26 billion, and adjusted revenues of $2.22 billion. Analysts currently anticipate earnings of $0.79 per share on revenues of $2.29 billion for the quarter.

Earlier, the company expected earnings of $0.01 to $0.04 per share, adjusted earnings of $0.76 to $0.79 per share, revenues of $1.30 billion, and adjusted revenues of $2.252 billion.

The latest forecast includes a $0.04 reduction due to a delay in closing of the Vivendi deal, which resulted in higher shares outstanding.

Activision and an investor group led by Kotick purchased most of French media giant Vivendi SA's (VIVEF.PK, VIV.L) stake in the company for about $8.17 billion, in order to regain its independence and leaving Vivendi with a stake of around 12 percent.

For the full year, the company now sees earnings of $0.83 per share, adjusted earnings $0.89 per share, revenues of $4.32 billion and adjusted revenues of $4.29 billion. Analysts currently expect full year earnings of $0.89 per share and revenues of $4.29 billion.

Earlier, the company expected earnings of $0.80 to $0.82 per share, adjusted earnings of $0.85 to $0.87 per share, revenues of $4.31 billion and adjusted revenues of $4.25 billion for the year.

ATVI closed Wednesday's trading at $16.53, on the Nasdaq. The stock, however slipped $0.35 or 2.12%, in the after-hours trade.