Macro Tsimmis

intelligently hedged investment

Activision Blizzard (ATVI) update—4Q08 results

Posted by intelledgement on Wed, 11 Feb 09

Our interactive entertainment company, Activision Blizzard, today announced their full year 2008 and 4Q08 results and the bottom line was…well…it depends.

The results are somewhat muddied by the Activision-Vivendi merger that was announced late in 2007 and which closed last July. On a generally-accepted-accounting-principles (GAAP) basis, the combined company had $3.0 billion in revenues for the year, and a loss of $200 million; the figures for 4Q08 were $1.6 billion in revenues and a loss of $72 million. However, the company also reported non-GAAP numbers which excluded the effects of the merger, and those were materially sunnier: full year revenues of $5.0 billion (which edged out the estimate of $4.9 billion) and earnings of $1.2 billion (in line with estimates). Non-GAAP revenues for 4Q08 amounted to $2.3 billion (again edging out the estimate of $2.2 billion) and earnings were $429 million or 31 cents per share (beating out the estimate of 29 cents per share).

Aside from the fact that the stock was down 42%, 2008 was a pretty good year. Of course the highlight was the merger that added Blizzard’s World of Warcraft massively multiplayer online role-playing game to the stable. On that front, Activision Blizzard CEO Robert Kotick commented, “[W]e successfully achieved our merger restructuring goals, including the elimination of unprofitable product lines, right sizing our organization and integrating disparate accounting and IT systems, all with minimal disruption to our business.” But there was a lot more to the year:

  • #1 third-party console and handheld software publisher in North America for 2008
  • #1 best-selling title on the Nintendo® DS, Guitar Hero® On Tour™ in the USA for 2008
  • #1 console, handheld, and PC publisher in the U.S. and Europe for 4Q08
  • Guitar Hero® III: Legends of Rock™ became the first video game ever to surpass $1 billion in sales
  • World of Warcraft® is now played by more than 11.5 million subscribers worldwide
  • $126 million—13 million shares—of common stock were repurchased at an average price of $9.68 under the $1 billion share repurchase program announced in November

As for 2009, ATVI management are projecting For calendar 2009, revenues of $4.2 billion, and a profit of 22¢ per share, including $860 million of revenues and 8¢ of profits in 1Q09. They also expect to release two games in March: Guitar Hero® Metallica® and Monsters vs. Aliens™, based on DreamWorks Animation’s (DWA’s) forthcoming 3D movie.

Previous ATVI-related posts:

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