Activision Reports Strong Quarter and Delivers Healthy Guidance

"Call of Duty: Black Ops II"
"Call of Duty: Black Ops II"
 

Activision Blizzard said on Thursday that, after certain items, it earned 8 cents per share in the second quarter on $608 million of revenue, exactly matching numbers that the maker of video games had pre-announced a week ago.

At the time of the pre-announcement, analysts had expected $601 million in revenue and a nickel a share in earnings.

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Activision Blizzard offered preliminary results a week ago when it announced that it would pay $5.83 billion to buy back a chunk of the company owned by Vivendi. On the same day, it said that an investment group led by CEO Bobby Kotick and co-chairman Brian Kelly would pay $2.3 billion, also for shares held by Vivendi.

On Thursday, shares of Activision Blizzard rose 1 percent to $18.19. Since last week's preliminary results were announced along with the Vivendi transaction, shares are up 20 percent.

On Thursday, in its earnings announcement, Kotick said: "The agreement we reached with Vivendi will make us an independent company and should deliver meaningful earnings per share accretion to our shareholders."

Kotick pointed to quarterly and half-year highlights that included best-selling games Skylanders Giants and Call of Duty: Black Ops II. He also said that World of Warcraft remained the No. 1 subscription-based massively multiplayer online role playing game, with 7.7 million subscribers.

The company also said that World of Warcraft has lost 1.3 million subscribers so far this year, and is well off its peak of 12 million subscribers. That, too, was known prior to Thursday's release of quarterly earnings. 

In an interview with The Hollywood Reporter, Kotick said that added content introduced in May has slowed defections from World of Warcraft, and a movie from Warner Bros. and Thomas Tull's Legendary Pictures, which is expected in 2015, that could help stem losses at the game.

"I have a lot of confidence in Thomas Tull. He is a really capable, driven guy, so we're hopeful," Kotick said.

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Kotick also addressed a question that in some circles has developed into a minor controversy: Who will the enemy be in a Chinese version of Call of Duty? Some speculate, after all, that the American version, in which players fight invading Russians, won't fly in China. Activision Blizzard has partnered with Chinese Internet company Tencent for Call of Duty, due as early as next year in China, and neither company has disclosed details about changes that will be made to the game.

"Look, it's a locally developed project," Kotick said. "One of the lessons we learned from World of Warcraft is that you have to make content unique to the market. Features, functions, capabilities, storylines, characters and the way you play. Everything will be unique to the Chinese market."

Kotick, who played a role in the 2011 Brad Pitt movie, Moneyball, also said he has no further offers to act.

"I think my acting career is over. I've peaked," he joked.

While the company offered healthy current-quarter guidance, shares were 2 percent lower during the after-hours trading session on Thursday.

Email: Paul.Bond@THR.com

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