logo
  Join        Login             Stock Quote

Activision Blizzard Inc. (NASDAQ:ATVI) Looking To Retool - Fred Dunsel (03/15/12)

 March 15, 2012 12:37 PM
 


Last Friday, videogame maker Activision Blizzard Inc. (NASDAQ:ATVI) closed at $11.91, marking a 2.06% gain for the week. After bottoming out in early March, the stock is now down 3.17% for the year. The sharp drop of 2.25% on 1 March came about after the Santa Monica, Calif. game maker announced that it was cutting a tenth of its workforce, even though it pointed out that an overwhelming majority of the job cuts were not "related to game development". Activision also emphasized that the layoffs have already been factored in its earnings forecast and will not affect its results this year.

Nonetheless, many analysts note that the company now needs to find a new growth engine besides the seven-year old World of Warcraft, especially since subscriber numbers for Warcraft have declined steadily in recent quarters. (The company ended 2011 with 10.2 million subscribers, down from 10.3 million in the previous quarter.) It is generally thought that Electronic Arts' new Internet game, Star Wars: The Old Republic may be chipping away at the Warcraft's user base. John Taylor of Arcadia Investment Corporation said, "Warcraft was a money machine for many, many years. The subscription numbers peaked out and have been eroding over the last several quarters. It is no longer a growth driver."

[Related -Activision Blizzard, Inc. (ATVI) Q4 Earnings Preview: February Usually Rings Up High Scores]

Because of this, the company's short-term profit growth will be more driven by its line-up of major titles to be released this year, such as Skylanders: Giants and Call of Duty 9. Activision is also banking on its Skylanders franchise for long-term growth, billing it as its next $1 billion franchise. The Skylanders figurines were the toy industry's biggest selling accessories last year, while its online virtual world – Skylanders: Spyro's Universe – already has more than 1 million users. The company is planning to launch a major marketing and retail campaign to get ready for Christmas, and has even concluded a deal with Penguin to produce a range of books.

[Related -Activision Blizzard, Inc. (ATVI) Q3 Earnings Preview: What To Watch?]

Given the above, analysts remain optimistic about the company's future growth. William Blair, which keeps an "outperform" rating on Activision, believes that the stock has 50% upside potential over the next 12-24 months should the company's current publishing and Blizzard margins prove sustainable.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageSector Detector: Bulls Go Down Swinging, Refusing To Give Up Much Ground

Although the stock market displayed weakness last week as I suggested it would, bulls aren’t going down read on...

article imageThe Bumpy Road Ahead To Policy Normalization

When the dust clears from tomorrow’s Fed announcement, the crowd’s expecting that the slow but persistent read on...

article imageAnalyzing Performance Histories That Might Have Been

The trend in recent years of securitizing more of the world’s market betas offers investors, in theory, read on...

article imageBig Prints in VIX Calls

The CBOE Vix Index is in positive territory on Friday morning as shares in the S&P 500 Index move slightly read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.