Activision Blizzard (ATVI) Beats 3Q Estimates

Activision Blizzard Inc. (NASDAQ:ATVI), the world’s largest video game publisher reported its third quarter results posting third-quarter sales, excluding changes in deferred revenue, fell 27% to $627 million from $857 million a year earlier. On that basis, analysts predicted $554.1 million, the average of 18 estimates. Total revenue gained 1.2% to $754 million, the company said.

Activision’s reported third-quarter net income almost tripled to $148 million, or 13 cents a share,. Excluding some items, profit of 7 cents exceeded the 2-cent average of 19 analysts’ projections compiled by Bloomberg.

For the year, profit excluding some items will be 85 cents a share, compared with 77 cents predicted by Activision in August and the 79-cent average estimate of 20 analysts.

One piece of bad news from the earnings results is the drop in World of Warcraft subscribers. The company reports current subscriptions at 10.3 million, a drop of 10% since May.
Robert Kotick, Chief Executive Officer, Activision Blizzard, said, “Today, we launched Call of Duty®: Modern Warfare 3™, which is perhaps the most anticipated video game in history and Call of Duty Elite, our new online service that makes playing together easier and more fun than ever before. Call of Duty Elite is a truly new form of entertainment combining Facebook-like social networking features and online television shows, offering the most accessible way to play Call of Duty games with other people.”

Kotick continued, “We continue to strengthen our position as the worldwide leader in interactive entertainment and the broadening of our audiences is confirmation that games are becoming as important as film and television as a mass-market form of entertainment. Our record nine-month results were driven the by the continued strength of our online-enabled franchises. Based on our third-quarter performance, stronger than expected consumer response to our new entertainment property, Skylanders: Spyro’s Adventures™, and Call of Duty: Modern Warfare 3, we are raising our full-year financial outlook and expect once again to deliver record operating margins and the highest earnings per share in our company’s history.”

Kotick added, “As we focus on 2012, we have a strong product pipeline which features a minimum of two highly-anticipated new titles from Blizzard Entertainment, including Diablo® III, and a new Call of Duty game from Activision Publishing. As a result, we expect to deliver another year of profitable growth. I believe our unyielding commitment to excellence and our creative talent around the globe will continue to position Activision Blizzard as the leader in interactive entertainment.”

Shares of Activision were trading at 13.24, down 5.38% at 11:14 am ET on Wednesday.

Competitors to Watch: Take-Two Interactive Software, Inc. (NASDAQ:TTWO), THQ Inc. (NASDAQ:THQI), Ubisoft Entertainment SA (EPA:UBI) and Electronic Arts Inc. (NASDAQ:ERTS)