Activision CEO says 'business as usual' after buyback deal
SAN FRANCISCO (Reuters) - Activision Blizzard Inc will conduct "business as usual" for now while it explores growth and acquisition opportunities, the video game publisher's CEO said on Thursday after sealing a deal last week to buy back most of parent company Vivendi's stake for more than $8 billion.
CEO Bobby Kotick would not be drawn out on his plans for the No. 1 video games publisher, which in past years has managed to outpace its rivals thanks to blockbuster franchises such as "Call of Duty." On Thursday, it reported a 42 percent drop in second-quarter revenue, reflecting broad contraction in the video games industry and a lighter games-release schedule.
"It makes it a lot easier to manage the business when you have one independent view and you don't have to consider the issues of the majority shareholder," Kotick said in an interview.
"It's business as usual," he added. "The single biggest change now is that we will have an undistracted focus on all of the opportunities and challenges in our business."
Activision shares dropped about 2 percent to $17.87 in after-hours trading after closing at $18.195 on the Nasdaq.
Activision Blizzard and an investor group led by Kotick and co-Chairman Brian Kelly reached an agreement to buy a portion of the majority stake held by France's Vivendi in an $8.17 billion transaction that would allow the company to become independent.
On Thursday, the company confirmed preliminary results that had been announced last week in conjunction with the deal.
For the quarter ended June 30, Activision said its non-GAAP revenue, adjusted for the deferral of digital revenue and other items, dropped 42 percent to $608 million, from $1.05 billion in the same quarter a year ago.
But that surpassed Wall Street's average revenue forecast for $604.8 million, according to Thomson Reuters I/B/E/S.
Non-GAAP income totaled $90 million, or 8 cents per share, dropping from $224 million, or 20 cents per share a year earlier.
Subscribers of its fantasy-action online game "World of Warcraft," a large source of steady subscription-based revenue, dropped to 7.7 million in the second quarter from 8.3 million last quarter, the company said last week.
Sales of console devices and games have declined from month to month since 2012, chiefly because of aging console devices and users migrating to inexpensive game offerings on mobile devices.
The industry is pinning its hopes for resurgent profits on news-generation video game consoles from Sony Corp and Microsoft Corp, which will go on sale this year-end holiday season.
Activision has warned that it expects to have higher marketing costs in the second-half and a challenging holiday quarter because of heavy competition and uncertainty around the demand for new video game consoles.
The company raised its full year GAAP forecast and expects revenue of $4.31 billion and earnings of 77 cents per share, compared to its previously announced revenue of $4.22 billion and earnings of 73 cents per share. It maintained its non-GAAP forecast of $4.25 billion in revenue and earnings of 82 cents per share.
Due to competition from devices like smartphones and tablets, some analysts expect that sales this console cycle will shrink compared to sales of last-generation consoles like Nintendo Co Ltd's Wii.
"Every console cycle that we've seen from 1990 has done better than the prior cycle and you keep building audiences and products that appeal to broader demographics," Kotick said. "I don't have a crystal ball but there's a lot to be enthusiastic about."
(Reporting by Malathi Nayak; Editing by David Gregorio)
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