Activision Blizzard, Inc. (ATVI) Information Technology - Software| Reports May 5, After Market Closes

Key Takeaways

• The Estimize consensus is calling for earnings per share of 15 cents on $823.85 million in revenue, 4 cents higher than Wall Street on the bottom line and $6 million on the top
• Activision’s acquisition of King Digital immediately makes them a major player in the highly profitable mobile gaming industry
• Activision is poised to benefit from a new Call of Duty game and World of Warcraft movie set to hit the market later this year
• What are you expecting for ATVI? Get your estimate in here!

Popular video game publisher, Activision Blizzard, is scheduled to report first quarter earnings today, after the market closes. Activision is best known for the Call of Duty and Guitar Hero games, among others. Despite the relative strength of the gaming industry, Activision is coming off a worse than expected quarter. That said, earnings have largely tracked expectations over the past 2 years. The fourth quarter featured a number of strategic initiatives that should pay off in this report and throughout the rest of the year

The Estimize consensus is calling for earnings per share of 15 cents on $823.85 million in revenue, 2 cents higher than Wall Street on the bottom line and $4 million on the top. Since its last report per share estimates have come down 18% with sales increasing 8%. This reflects an 8% decline in EPS compared to a year earlier while revenue is expected to climb 17%. If 50% returns in the past 12 months weren’t enough, Activision is a positive mover through earnings. The stock often experiences its biggest gain of 4% in the 30 days following its report.

This big news last quarter was Activision’s acquisition of mobile gaming company King Digital Entertainment. King Digital is the maker of the wildly popular mobile game Candy Crush, and its other iterations. The company’s cash cows today are console and PC games like Call of Duty and World of Warcraft, so its emergence in mobile gaming adds an important third revenue stream. This year, mobile gaming surpassed both console and PC games as the most profitable segment in the industry.

Meanwhile, the company’s flagship products have also been in the news. The newest Call of Duty game was recently announced to hit the market this November, just in time for the holiday season. Additionally, the first World of Warcraft movie is prepared to hit the big screen this summer which could help drive game sales. Apart from just video games, Activision is making strides to become a broad based media company. The company recently launched a movie studio and is now making its presence in the emerging e-sports market.

Nonetheless, Activision still operates in a highly competitive market against traditional powerhouses in Electronic Arts and up in coming companies like Glu Mobile and Zynga. The higher adoption of freemium games, weak economic outlook and over reliance on major franchises add to the company’s uncertainties.