* Fourth-quarter earnings, revenue beat Street view
* Vide0game maker earned 78 cents per share
* 2013 forecast below Street's expectations
* Shares up 5.5 percent
By Malathi Nayak
Feb 7 Activision Blizzard Inc's
earnings beat Wall Street expectations after its "Call of Duty"
and "Skylanders" titles had blockbuster holiday sales, shoring
up investor confidence in the world's largest videogame
publisher despite a cautious forecast for 2013.
The videogame maker also forecast a first-quarter profit
above industry analyst targets, guiding to earnings, excluding
items, of 10 cents a share, versus an average forecast of about
Shares of Activision were up 5.5 percent to $12.72 in
after-hours trading, from a close of $12.06 on the Nasdaq.
The company forecast earnings for the calendar year 2013 at
80 cents, below the Street's view of 96 cents, according to
Thomson Reuters I/B/E/S.
While Activision is being "appropriately cautious" going
forward, it could easily achieve its earnings forecast, said
Sterne Agee analyst Arvind Bhatia.
"This is classic Activision - they beat and provide
conservative guidance, then they execute and try to beat their
guidance," Bhatia said.
Fourth-quarter non-GAAP revenue, adjusted for the deferral
of digital revenue and other items, rose 8.3 percent to $2.6
billion from $2.4 billion a year ago, surpassing Wall Street's
average revenue forecast for $2.44 billion.
And non-GAAP income was $891 million, or 78 cents per share,
in the fourth quarter, compared with $725 million, or 62 cents a
year earlier. This beat industry analyst estimates of 72 cents,
according to Thomson Reuters I/B/E/S.
As more gamers migrate to free mobile offerings on tablets
and smartphones from $60 console games, the video game industry
has seen revenues drop consistently since last year.
"We encounter new threats from unproven business models, and
we compete against new category entrants," Activision's CEO
Bobby Kotick said in a post-earnings call with analysts.
New game hardware could potentially boost sales in the
troubled video game sector, according to analysts. Consumers are
holding back from buying hardware and software as they wait for
rumored next-generation versions of Sony Corp's
PlayStation and Microsoft Corp's Xbox, expected later
The coming year would be a "transition year," Kotick said,
referring to the new video game consoles that could soon enter
"We aren't immune to unfavorable market dynamics, but we
have navigated transitions many times before and we are well
prepared to do so again," Kotick said.
Despite a weak market, first-person shooter "Call of Duty:
Black Ops 2" that hit store shelves in November reached $1
billion in global sales within 15 days of its release.
Child-friendly franchise "Skylanders," which has games sold
with physical toys that come to life on screen when they are
connected to video game consoles, generated revenues of
approximately $1 billion to date since its launch in October
2011, Kotick said.
Activision's next major release "StarCraft II: Heart of
Swarm" - an expansion pack from its hugely popular sci-fi
strategy game franchise - is set to go on sale on March 12.
This week, Activision announced "Skylanders SWAP Force," the
next title from its popular children's franchise is expected to
release in the second half of the year.
"Clearly the line-up is lighter than 2012 which is reflected
in the guidance, Bhatia said.
Last summer, the company said it plans to take "Call of
Duty" to China as a free-to-play online game in partnership
with Tencent Holdings Ltd, an Internet and wireless
services provider in China.
Activision's executives did not provide details about the
release window of its "Call of Duty" online game, when asked by
analysts on the post-earnings call.
Subscribers of "World of Warcraft," Activision's most
profitable business and the source of a steady stream of
subscription-based revenue, dropped slightly to 9.6 million from
10 million last quarter, the company said.