Tag Archives: Activision Blizzard

Video Gaming

Vivendi Pulling Billions From Activision for Debt?

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Activision parent company Vivendi is reportedly looking to draw billions of dollars from Activision’s cash funds in order to pay its own debt. According to the Wall Street Journal, Vivendi is considering voting on pulling roughly $3 billion from Activision’s cash reserves by way of a “special dividend,” netting about $2 billion due to its 60% stake in the publisher.

Back in May, Activision reported that it has no debt and $4.6 billion in cash, meaning Vivendi’s withdrawal would take a significant chunk out of the company’s assets. Since Activision’s cash isn’t entirely held in the U.S., the Journal points out that “Activision Blizzard would have to raise debt of its own to fund such a dividend.” Specifically, “$2.7 billion of that cash is held offshore, and would be subject to U.S. taxes if repatriated, according to company filings.”

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Source: FULL ARTICLE at IGN Video Games

Science & Technology

Activision’s CEO Made $65 Million Last Year

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Activision CEO Robert Kotick is among the highest-paid Chief Executive Officers in the United States. According to Reuters, Kotick made a total of $64.9 million in 2012, including $56 million in stock awards. Kotick’s salary for 2012 was $2 million, twice what he made in 2011.

Compared to other CEOs in 2012, Kotick made more than three times the $21 million earned by Goldman Sach Group Inc’s Lloyd Blankfein, and 50% more than Walt Disney CEO Robert Iger, who earned $40.2 million.

Kotick is also a board member of Coca-Cola and appeared in the 2011 film Moneyball. He became CEO of Activision in 1991, and later became CEO of Activision Blizzard after Activision joined with Vivendi in 2008.

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Source: FULL ARTICLE at IGN Tech

Business, Finance, Occupation & Industry

An Underrated (but Important) Reason to Buy Disney Stock Now

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By Tim Beyers and Erin Miller, The Motley Fool

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Uh-oh. Walt Disney is killing part of the Star Wars franchise it acquired in October for $4 billion. The good news? Like Obi-Wan Kenobi, the dead will rise soon enough, and in perhaps a more powerful form.

Specifically, Disney has closed 31-year-old game-development division LucasArts and laid off some 200 employees who worked there, The Wall Street Journal reports. New Star Wars universe games — presuming any are under consideration — will be published elsewhere.

It’s a good move, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova in the following interview with The Motley Fool’s Erin Miller. Researcher NPD put LucasArts’ revenue at just $55 million last year, down sharply from $175 million in 2006.

What’s more, Tim says, Disney is the world’s largest brand licensor and as such could extract good terms from the likes of Electronic Arts and Activision Blizzard , both of which have long, successful histories with developing games around licensed brands. The possibility of such a deal may help explain why Disney stock reached another new high this week.

Are you more bullish on Disney’s prospects after seeing this news? What about Activision and EA? Please watch this short video to get Tim’s full take, and then leave a comment to let us know whether you’d buy or sell Disney stock now, and why.

It’s easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its monster collection of media networks, much of Disney’s allure for investors lies in its diversity, and The Motley Fool’s premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch as well as the opportunities and threats the company faces going forward. So don’t miss out — simply click here now to claim your copy today.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, contentByline: “Tim Beyers and Erin Miller“,

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Could Zynga Rise to Its Former Glory?

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By Steve Symington, The Motley Fool

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Let me start by admitting that I’ve never been fond of Zynga from an investment standpoint.

While its games might be mildly entertaining, I’ve voiced skepticism for its buybacks and acquisitions, questioned the sustainability of its business model, and frowned at the seeming lack of faith in the company demonstrated by founding CEO Mark Pincus. Remember, after all, that Pincus sold around 16 million Zynga shares for nearly $200 million just two months before the stock tanked on its terrible second-quarter results last year:

Source: ZNGA data by YCharts.

What’s more, I certainly wasn’t alone in my distaste of the company. The Motley Fool community as a whole voted Pincus the worst CEO of 2012, with additional thanks to Zynga’s skyrocketing R&D costs, a mass exodus of executive and engineering talent, and a crumbling share price.

Departure from the norm
Even so, that’s exactly why it’s so interesting that Pincus last week not only voluntarily lowered his salary to $1, but also opted out of the company’s cash bonus and equity award programs in 2013 in a radical departure from his previous actions. 

Could this be his first step toward making amends with angry shareholders? Maybe.

Then again, perhaps he’s just trying to put on a show in the fallout of his decision to sell in the face of multiple nasty insider trading allegations.

Can this house win?
However, Zynga did jump by as much as 17% last Wednesday after the company made good on its promise of officially launching its first real-money gambling titles in the U.K., including ZyngaPlusPoker and ZyngaPlusCasino. As fellow Fool Tim Beyers pointed out last week, even Zynga haters have found themselves intrigued by the massive upside potential of its bet on real-money gambling games.

Source: Zynga.

Apart from this unproven revenue stream, however, I still remain firmly in the camp of doubters who wonder whether the company can actually innovate to stay afloat. After all, The Sims Social game creator EA sued Zynga last year, claiming the smaller company blatantly copied The Sims franchise with its own version titled The Ville. While the two companies settled the suit out of court in February without disclosing terms, fellow Fool Evan Niu astutely noted many, if not all, of Zynga’s games at the time of the lawsuit appeared to have eerily similar roots in other companies’ existing titles. EA, for its part, seemed to be the only company with a large enough presence to be willing to officially call a spade a spade on paper.

Game-specific spats aside, I’m also concerned that Zynga won’t be able to consistently pump out a large enough number of massively popular, low-priced games with its core business to keep players entertained for any extended period of time. This lack of long-term sustainability is exactly why I would much prefer owning shares of EA or, better yet, gaming stalwart Activision Blizzard, which …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Disney's Big LucasArts Gamble

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By Demitrios Kalogeropoulos, The Motley Fool

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Disney is through playing games.

The House of Mouse just shut down LucasArts, the video game studio it purchased along with Lucasfilm for $4 billion late last year. Almost all of the 200 people employed at LucasArts have been laid off, according to The Wall Street Journal. And the two new games that they were working on, Star Wars: 1313 and Star Wars: First Assault, may never see the light of day.

Disney is walking away from some potentially huge video game content around the Star Wars brand. And instead, it’s putting all of its gaming chips this year onto one title centered on its own characters like Buzz Lightyear and Jack Sparrow. Called Disney Infinity, that game is slated to come out in August.

Infinity is the company’s answer to Skylanders, the action figure/console game hit from Activision Blizzard that has quickly grown into one of Activision’s tentpole franchises. The big draw in this category is that gaming revenue gets a boost from the sales of toy figures that accompany the game discs. Players collect any number of action figures that they can interact with both inside and outside of the console game.

The result can be a bounty at the cash register. Activision’s Skylander franchise sales rocketed to $1 billion in just 15 months on the strength of millions of toy sales.

Disney was already going to need a similar kind of hit for Infinity to reverse the losses coming out of its gaming studio, Disney Interactive. That business group shed more than $200 million for Disney over each of the last three years, making it by far the worst performer in the House of Mouse. Even Disney’s studio arm, which occasionally has to absorb expensive flops like last year’s John Carter, consistently kicks in more than $600 million to the company’s bottom line.

Disney has a decent shot at hitting it big with Infinity. It might not be the first to the party in this video game sector, but Disney boasts a wide catalog of characters that young gamers already know well. The game will include figures from among Disney’s hit properties, including Toy Story, Monsters, Inc., and Pirates of the Caribbean.

However, Activision isn’t ceding the category to Disney — not by a long shot. The gaming company is working on an innovative twist to its Skylanders franchise, and will have a sequel out soon. This rivalry may not be a Star Wars-level epic, but it should be entertaining anyway. Stay tuned.

From its vast catalog of characters to its monster collection of media networks, much of Disney’s allure for investors lies in its diversity. The Motley Fool’s premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch as well as the opportunities and threats the company faces going forward. So don’t miss out — simply click here now to claim …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Is This the Next Big Thing for Gaming?

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By Chris Hill, The Motley Fool

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The following video is from Wednesday’s MarketFoolery podcast, in which host Chris Hill and analysts Jason Moser and Alex Scherer discuss the top business and investing stories of the day.

Shares of social game company Zynga rose after the company announced that it would launch two new, real-money gambling games in the U.K. Zynga’s games will include ZyngaPlusPoker and ZyngaPlusCasino. Should investors bet on Zynga? Should video game companies like Activision Blizzard and Electronic Arts get in on the gambling action? In this installment of Investor Beat, our analysts discuss Zynga’s big bet and the future of gaming.

Zynga’s post-IPO performance has been dreadful, and investors are beginning to wonder if it’s “game over” for this newly public company. Being so closely tied to the world’s largest social network can be a blessing and a curse. You can learn everything you need to know about Zynga and whether it’s a buy or a sell in our new premium research report. Don’t even think about picking up shares before you read what our top analysts have to say about Zynga. Click here to access your copy.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Sony Shares Pop on an Upgrade From Down Under

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By Rich Smith, The Motley Fool

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Shares of Sony are flying 3% higher today, and inquiring investors want to know why.

Is it because the Associated Press is reporting that the company’s feature film The Call collected $4.9 million in box office receipts over the weekend for a grand-total, three-week haul of…$39.6 million? Unlikely.

Or could it be that investors are clamoring for a piece of Sony action as the company’s much-anticipated PlayStation 4 gaming console comes to market? Possibly. The fact is, the imminent arrival of a new round of console upgrades has been doing good things for the stocks of most gaming-related companies: The shares of retailer GameStop and game makers Electronic Arts and Activision Blizzard are all up strongly in recent months. This, however, is not a phenomenon solely restricted to Sony — and it doesn’t explain why its stock is outperforming everyone else this morning.

Honestly, I suspect that the reason Sony is showing strength today is the worst reason of all: Investors like Sony stock today because some banker just said that it likes Sony stock, too.

Don’t take advice from down under
South of the equator, analysts at Macquarie Group upgraded shares of Sony this morning, saying they expect the stock to outperform the market. Why? No one seems to know. Major media outlets have no details on the upgrade. StreetInsider.com — usually a good source for this sort of thing — says only that the upgrade happened but knows nothing more than that.

Here’s what we do know: Whatever you think of the PlayStation 4 and its prospects, the company that makes the console is a dog of an investment. These shares have underperformed the S&P 500 by close to 30 percentage points over the past year, shedding fully a fifth of their value.

As for the company behind the ticker symbol, Sony is unprofitable today, and analysts have such a dim view of next year’s return to profitability that the stock‘s current valuation, divided by next year’s hoped-for (and uncertain) profits, works out to a sky-high forward P/E ratio of 85. Meanwhile, the amount of cash generated from operations at Sony is at its lowest level in four years.

Foolish final thought
None of this, suffice it to say, is good news for Sony or its investors. None of it seems to justify blindly following some analyst’s advice and buying a stock that looks so eminently unbuyable.

While Activision and Microsoft have been taking the headlines when it comes to console gaming, Fools following the gaming sector would do well to also keep tabs on Electronic Arts. We can help. Our new special report breaks down the risks and opportunities facing the company to help you decide whether EA is right for your portfolio. Click here to get your copy now.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

GameStop's $1.5 Billion Secret

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By Demitrios Kalogeropoulos, The Motley Fool

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GameStop isn’t done shrinking. After booking two years of falling comparable sales, the company has yet to engineer a stop to the slide in any of its core businesses.

Last quarter was no exception. Revenue from new gaming hardware fell again, to $616 million. That number was closer to $800 million at the beginning of 2011. And the same goes for software titles. GameStop saw a 3% sales decline in that category. Even the company’s pre-owned gaming products — where it gets the biggest chunk of its profits — fell by more than 7%.

But there is one area where the gaming retailer’s sales are actually spiking. It’s a category that GameStop just calls “other,” and it grew by a scorching 22% last quarter — passing $1.5 billion in revenue for the full year.

Since the name of the category doesn’t tell us much about its composition, let’s take a closer look at what’s included in it.

Mobile business: Sales of pre-owned consumer electronics like smartphones and tablets, which GameStop allows customers to trade in for cash or store credit, make up the biggest piece. The company says the market for these used devices is about $1.6 billion, and it expects to grow its sales by between 30% and 40% this year. The mobile business generated a 28.8% profit margin rate last quarter and added $100 million in revenue just on its own.

Digital sales: Despite being built for traditional retailing, GameStop hasn’t completely missed the boat on downloadable content. The company’s sales of digital content and subscriptions are accounted for as “other” sales, and they grew by 71% last quarter. These sales are also very profitable for GameStop. They generated a 58% margin in the fourth quarter.

Toys: Thanks to the runaway success of Activision Blizzard‘s Skylanders console game, which requires action figures that work with the game, GameStop is selling a lot more toys lately. The Skylanders franchise has quickly grown to over $1 billion of sales for Activision. And with a major sequel coming out soon, combined with Disney‘s own entry in the category, toy sales should only increase for GameStop as these two giants duke it out.

Foolish bottom line
 In fact, each of these three components has a bright future ahead. So it isn’t hard to see how GameStop’s “other” category could grow from its current perch at just under 25% of the company’s gross profit to become an even bigger earnings driver. Let’s just hope that GameStop will have picked a more descriptive name for it by then.

Magic for investors?
It’s easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its monster collection of media networks, much of Disney’s allure for investors lies in its diversity, and The Motley Fool’s new …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Is EA the Worst Company in America?

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By Jeremy Phillips and Austin Smith, The Motley Fool

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Electronic Arts hasn’t been winning any friends with its customer-service snafus recently, and the shoddy behavior has landed the company in The Consumerist‘s bracket for “The Worst Company In America” — yet again.

But the real question is how this poor sentiment translates to investor returns. In the following video, Jeremy Phillips and Austin Smith reflect on what the poor service means for shareholders, and their conclusions aren’t good.

While Activision Blizzard and Microsoft have been taking the headlines when it comes to console gaming, Electronic Arts has been languishing. If you’re wondering how to play the new landscape of gaming, we can help. Our new special report breaks down the risks and opportunities facing the company to help you decide whether EA is right for your portfolio. Click here to get your copy now.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Facebook's Next Target? Core Gamers

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By Daniel Sparks, The Motley Fool

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Facebook is now a major player in the games market. This may not be a surprise to avid Facebook gamers, but this new reality carries important implications for investors interested in the space, regardless of their gaming habits on the social network.

Looking beyond FarmVille
Facebook’s vision for its gaming platform goes far deeper than Zynga‘s FarmVille. With an increased focus on serious gamers, the company could draw in developers of console-like games, such as Microsoft, Electronic Arts , and Activision Blizzard and their flocks of core gamers.

“Riveting games with intense graphical fidelity are possible on Facebook,” says Games.com’s Joe Osborne. While most Facebook members are probably familiar with casual games like Candy Crush Saga and FarmVille, Facebook is gearing up to become a competitive destination for action and console-like games.

At the Game Developers Conference yesterday, Facebook’s director of games partnerships, Sean Ryan, named several games of this type that are set to release soon: Tome, Chronoblade, and Imperium.

Apparently the company’s $3 billion share of the $15 billion games market isn’t satisfying Facebook’s ambition. Ryan told AllFacebook (the “unofficial Facebook blog”) in February that one of its biggest goals this year is to be a go-to destination for core and mid-core gamers. He feels that this is inevitably where the social gaming market is headed. “Last year was primarily about casino, hidden object, and casual, and we’ll continue to see those expand. But I think we’ll see a rise in the core games as developers figure out how to make them social.”

It’s no wonder Facebook wants to push further into the games market. It is an area of astounding growth for the company, according to Ryan. Game installs on Facebook are up 75% from this time last year. Furthermore, paying gamers on Facebook have increased 25% over the last 12 months.

Can traditional gaming companies flourish in social gaming?
The trend toward higher-graphic action games on Facebook’s platform is good news for gaming behemoths Microsoft, EA, and Activision. As Facebook makes inroads with core games, developers of console games will have to worry less about casual games stealing the attention and time of their serious gamers.

More importantly, as console-like games become possible on Facebook’s platform, companies like EA and Activision can use their vast experience and resources to launch successful core games on the platform. In fact, both EA and Activision have already commenced social ventures.

In 2012, Activision unveiled a publishing segment devoted to developing third-party games for the social-mobile gaming world. Morningstar analyst Carr Lanphier describes the segment as important but still insignificant to the company’s earnings. For now, “It allows the company to get the lay of the land — no easy task in the volatile world of social and mobile gaming — and figure out the best strategy to grow profitably in the newly emerging market.”

EA has taken a more aggressive approach. The company already …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

1.1 Million Reasons to Look at This Gaming Stock

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By Tim Beyers, The Motley Fool

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To be an Electronic Arts investor is to possess an iron stomach. The stock is up more than 22% year to date, touching a new 52-week high recently, but there are many — including former CEO John Riccitiello — who think EA should be doing better.

Riccitiello resigned after the company issued disappointing guidance for the current quarter. And that’s in spite of selling 1.1 million copies of the new edition of Sim City shortly after release. Trouble is, the total could have been higher: EA‘s servers proved unable to handle the online aspects of the game, forcing the company to up capacity by some 400%.

Should investors be concerned by the gaffes? Not really, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova. In the following video, he illustrates the difference between EA and experienced online peers Activision Blizzard and Zynga and explains why the stock still has room to run.

While Activision and Microsoft have been taking the headlines when it comes to console gaming, Fools following the gaming sector would do well to also keep tabs on Electronic Arts. We can help. Our new special report breaks down the risks and opportunities facing the company to help you decide if EA is right for your portfolio. Click here to get your copy now.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Is Activision Blizzard a Cash King?

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By James Royal, The Motley Fool

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As an investor, it pays to follow the cash. If you figure out how a company moves its money, you might eventually find some of that cash flowing into your pockets.

In this series, we’ll highlight four companies in an industry, and compare their “cash king margins” over time, trying to determine which has the greatest likelihood of putting cash back in your pocket. After all, a company can pay dividends and buy back stock only after it’s actually received cash — not just when it books those accounting figments known as “profits.”

Today, let’s look at Activision Blizzard and three of its peers.

The cash king margin
Looking at a company’s cash flow statement can help you determine whether its free cash flow actually backs up its reported profit. Companies that can create 10% or more free cash flow from their revenue can be powerful compounding machines for your portfolio. A sustained high cash king margin can be a good predictor of long-term stock returns.

To find the cash king margin, divide the free cash flow from the cash flow statement by sales:

Cash king margin = Free cash flow / sales

Let’s take McDonald’s as an example. In the four quarters ending in December, the restaurateur generated $6.97 billion in operating cash flow. It invested about $3.05 billion in property, plant, and equipment. To calculate free cash flow, subtract McDonald’s investment from its operating cash flow. That leaves us with $3.92 billion in free cash flow, which the company can save for future expenditures or distribute to shareholders.

Taking McDonald’s sales of $25.5 billion over the same period, we can figure that the company has a cash king margin of about 14% — a nice high number. In other words, for every dollar of sales, McDonald’s produces $0.14 in free cash.

Ideally, we’d like to see the cash king margin top 10%. The best blue chips can notch numbers greater than 20%, making them true cash dynamos. But some businesses, including many types of retailing, just can’t sustain such margins.

We’re also looking for companies that can consistently increase their margins over time, which indicates that their competitive position is improving. Erratic swings in margins could signal a deteriorating business, or perhaps some financial skullduggery; you’ll have to dig deeper to discover the reason.

Four companies
Here are the cash king margins for four industry peers over a few periods.

<td valign="bottom" …read more
Source: FULL ARTICLE at DailyFinance

Company

Cash King Margin (TTM)

1 Year Ago

3 Years Ago

5 Years Ago

Activision Blizzard

26.2%

18.5%

26%

13.5%

Electronic Arts

6.4%

2.4%

(5.5%)

4.7%

Take-Two Interactive Software

(0.4%)

(9.8%)

(8%)

11.3%

Sony

Business, Finance, Occupation & Industry

GameStop: It's All Downhill From Here

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By Rick Aristotle Munarriz, The Motley Fool

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Today is a good day for the video game industry.

Take-Two Interactive‘s BioShock Infinite hits the market, and the dystopian adventure is garnering rave reviews. The first two releases in the franchise sold a combined 10 million copies, and Take-Two has cracked open the piggy bank in recent days for national TV ads.

Enjoy today, die-hard gamers. Take Wednesday off. Worry about Thursday.

GameStop reports on Thursday morning.

On the surface, everything’s rosy at the leading stand-alone video game retailer. The shares are trading near December’s 52-week high. Analysts see profitability per share climbing 21% to $2.09, and after coming off back-to-back quarters of beating Wall Street‘s forecasts on the bottom line, it would seem as if momentum is in GameStop’s favor.

Well, it’s not.

This new level gets harder
There are a few reasons to fret about the upcoming report.

Let’s start with a snapshot of the industry. We already know that GameStop had a lousy Christmas.

GameStop’s global sales during the holiday months of November and December fell 4.6% to $2.88 billion. Comps slipped 4.4% during the seasonally critical period. Analysts only see net sales at GameStop falling 3.5% for the quarter ending in January, and that’s optimistic since January was another bad month for the industry.

Why would Wall Street be targeting a 21% pop in profitability on falling sales? It’s not as if the market is holding out for margin expansion. GameStop’s most lucrative business is the sale of preowned games and gear. It generates more than twice the gross profit percentage as new software sales. Forget about hardware sales, where GameStop can only afford a nominal markup. Well, the sale of secondhand gear is slipping at a faster rate than the new stuff — and that’s only going to get worse if new PS4 and Xbox 720 consoles prohibit the playing of hand-me-down titles as has been rumored.

The secret to buoyant earnings is GameStop deploying its greenbacks to buy back shares. Stock repurchases are good for the most part, but at this retailer it’s masking the real demise in its business.

Just check back with the chain’s fiscal third-quarter results. Adjusted net income declined by 12% even though it was nearly flat on a per-share basis. Swallowing down gobs of stock will do that, but it doesn’t mean that the fundamentals aren’t deteriorating.

Amnesia is a losing game
The market seems to forget that the gaming industry is deep into a three-year slide.

The two leading video game publishers — Electronic Arts and Activision Blizzard — hit fresh 52-week highs this month.

Why? This is an industry in decline. EA and Activision Blizzard have their marquee franchises holding up well, but everything else is falling apart at the seams. One can argue that EA and Activision Blizzard are in a better place than GameStop. They will cash in on the digital revolution and the lack of resale activity on downloads. GameStop — despite having made some digital moves …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

3 Reasons to Buy Activision Blizzard

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By Andrew Marder, The Motley Fool

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Unless you make cereal, you usually don’t sell a million copies of your product over a weekend. The mere fact that Activision Blizzard was able to move 1.1 million copies of StarCraft II: Heart of the Swarm in the first 48 hours says something about the company’s customers — two things, if we’re counting. First, that they’re dedicated followers of the brand and the products. This wasn’t even a new product, it was an expansion to an old one. That implies that well over 1.1 million people own that original product.

Second, it highlights the cash that the company is capable of pulling in because of its brand strength. The expansion retails for $40, meaning that StarCraft made more money that week than most movies at the box office did. While having a hot product isn’t reason enough to invest in a company — see “pet rock” — it’s not a bad reason to look into a business. Here are three solid reasons to get on board with Activision Blizzard.

It makes money
Sometimes you sell a lot of those Nooks and still don’t make any money, but Activision isn’t playing that game. The company earned $4.8 billion in revenue last quarter, resulting in earnings per share of $1.01. That has enabled the company to announce a $0.19 dividend payable in May, and might result in some share repurchasing, as well. The success came from the popularity of two major franchises — Call of Duty and Skylanders — which ran at the top of the U.S. charts for much of the year.

Activision has been very successful at making the most out of its subscribers, earning revenue at every possible turn. The two I want to highlight are World of Warcraft, a subscription-based game boasting over 9.5 million users, and Skylanders, a video game that interacts with collectible figurines. At the end of last year, Skylanders had generated over $1 billion in worldwide sales.

Last year, the company ran a healthy operating margin of 40%, which compares favorably to Electronic Arts , which has been running at an operational loss. Activision has been judicious with its cash as well, generating a free cash flow of $1.3 billion over the last year. That’s the sort of financial stability that allows the company to really play with how it generates money — the second big reason to buy Activision.

It makes money in new and intelligent ways
The company has been a front-runner in both the microtransaction and subscription spaces. Activision generated 34% of its revenue in subscriptions and licensing fees last year. That’s a fantastically sticky source, and it allows the company to try new things — like selling collectible toys. Skylanders was a stroke of marketing genius, and it has allowed the company to release popular new content in big batches. With each new game comes a whole host of new toys for kids to collect. But to keep …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Why Activision and DreamWorks Are Going Small

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By Demitrios Kalogeropoulos, The Motley Fool

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DreamWorks Animation shareholders can all exhale now.

The Croods, one of just two movies that the company will release this year, is off to a good start at the box office. The tally on its opening weekend box office haul was a cool $45 million.

That strong launch means we probably won’t see another big write-down like the one that swamped DreamWorks’ results last year.

But there’s more for investors to like about The Croods than just solid revenue. Just as important is how much it cost DreamWorks to produce the film. And by that measure the company has already won. This movie was a bargain compared to DreamWorks’ last few outings.

The Croods cost just $135 million to make, much cheaper than the $150 million the animator usually shells out to develop a feature. And it plans to drive those costs down even further over the next 18 months — to around $120 million per film.

It works for games, too
DreamWorks isn’t the only company that’s trying to do large-scale entertainment on a small-scale budget these days. Game maker Activision Blizzard‘s newest title is also a move in that direction. Called Hearthstone, the game is a big departure from the company’s massive-multiplayer, world-encompassing epics.

While the new game is based on Activision’s World of Warcraft hit, it is far less ambitious in scope. This card-building game handles two players at a time, and took a team of just a few developers to put together. That’s a far cry from the years of development and hundreds of millions of dollars that Warcraft needed. Still, Activision says the result has been an easy, accessible game that might not be epic in size, but is still “epically engaging.”

I think these are smart moves by Activision and DreamWorks. Both companies could stand to rely less on a handful of blockbuster titles and thus risk a single flop that could torpedo the year’s results. And while it makes sense to keep swinging for the fences occasionally, there’s no reason that every title has to follow that path.

By driving the cost bar lower, they are free to try some more innovative stuff. And who knows? The next big franchise might even come from one of these less-expensive productions.

While Activision and Microsoft have been taking the headlines when it comes to console gaming, Fools following the gaming sector would do well to also keep tabs on Electronic Arts. We can help. Our new special report breaks down the risks and opportunities facing the company to help you decide if EA is right for your portfolio. Click here to get your copy now.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Who Wins as Disney and Activision Square Off?

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By Demitrios Kalogeropoulos, The Motley Fool

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With its new Infinity console game, Disney is hoping to wrangle big profits out of the new game sector that Activision Blizzard  pioneered to great success with its Skylanders franchise. Is Disney set to dethrone Activision here? Fool contributor Demitrios Kalogeropoulos gives investors his take on which company stands to profit the most from this battle.

It’s easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its monster collection of media networks, much of Disney’s allure for investors lies in its diversity, and The Motley Fool’s new premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch as well as the opportunities and threats the company faces going forward. So don’t miss out — simply click here now to claim your copy today.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

EA's CEO Isn't the Problem, Folks

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By Rick Munarriz, Munarriz, The Motley Fool

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You don’t often see a CEO shown the door after his stock hits a 52-week high, but that’s pretty much what’s happening at Electronic Arts .

John Riccitiello will be leaving both the company and the boardroom of the country’s second-largest video game publisher by the end of next week.

“We have mutually agreed that this is the right time for a leadership transition,” offers the press release, but we all know what that means. EA‘s board wants new blood at the helm, and will now work with an executive search firm to consider internal and external candidates.

Was EA a disappointment under Riccitiello’s watch? Definitely. The stock shed roughly two-thirds of its value during his six-year tenure. However, it did hit a 52-week high last week. Despite the challenging climate, EA delivered better-than-expected bottom-line results in each of the six previous periods.

It obviously hasn’t been a very easy level for EA to play lately.

Despite the new high, this is still a company whose adjusted revenue and net income plunged 28% and 47%, respectively, in its latest quarter. EA is also now warning that results for its current quarter will come in at the low end — and possibly even below the low end — of its earlier guidance.

Is this problem really limited to EA? Isn’t the board aware of what’s happening in its own industry?

  • Industry tracker NPD Group has been reporting consistently lower hardware and software sales for years. Its latest update found retail sales of video game software plunging 27% last month.
  • As Riccitiello has struggled, larger rival Activision Blizzard hasn’t been able to trade higher than the mid-teens. Analysts also see revenue and profitability declining at Activision Blizzard this year. Again, this isn’t just a problem at EA.
  • Video game retailer GameStop has lowered its same-store sales outlook four times over the past year.
  • A popular thesis last year was that die-hard gamers would come out again when new consoles hit the market. Well, the Wii U rolled out in November. Crickets are still chirping.

If anything, these moves should validate Riccitiello’s strategy of attacking the casual and social gaming markets. The acquisitions of Playfish and PopCap Games didn’t come cheap, but they did help EA become the top iOS publisher last year. Traditional video game sales are sputtering for everybody, and Riccitiello’s decision to move on after Take-Two Interactive rebuffed its buyout offer of $26 — instead of coming back with a higher price — was the right thing to do. The company behind the Grand Theft Auto franchise is stuck in the mid-teens.

EA‘s problem isn’t Riccitiello, and investors will realize that when the company’s next CEO inherits the malaise.

Continue?
While Activision and Microsoft have been taking the headlines when it comes to console gaming, Fools following the gaming sector would do well to also keep tabs on Electronic Arts. We can help. Our new special report breaks down the risks and opportunities facing …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Is Activision Blizzard Afraid of Disney?

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By Rick Munarriz, Munarriz, The Motley Fool

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One of last year’s best-selling video game franchises is a popular markdown this week.

Activision Blizzard stumbled on a sleeper hit in Skylanders last year. Skylanders Spyro’s Adventures was the industry’s hottest seller through the first half of 2012. Combining actual action figures that engage in video game battles once docked on a console-connected portal, the leading video game publisher succeeded in winning over young gamers that seemed to have given up on following their older siblings and parents into diehard gaming.

Now we’re seeing Skylanders Giants starter pack — a platform that rolled out late last year with larger figures for $75 — being aggressively discounted.

Sifting through Sunday’s circulars, here are some pretty nifty deals I came across.

  • Best Buy is marking the starter pack down to $55, and buyers get a free lunchbox.
  • The starter pack made the front page of Target‘s circular with a mind-blowing $40 price.
  • Toys “R” Us is offering a $25 gift card with any Skylanders purchase of $80 or more, and it’s also marking down additional figurines by 50%.
  • Not to be outdone, Amazon.com is matching Target’s rock-bottom price.

Popular video games do get popular as they age, but it’s not a coincidence that we’re seeing a wave of discounts. Retailers just began taking preorders for a similar Disney gaming experience.

Disney Infinity won’t hit the market until this summer, but it’s easy to see why Activision Blizzard is getting aggressive. It’s a similar format where physical figures are docked to enter Disney’s virtual realm.

We’re not talking about Daisy Duck and Mickey Mouse, here. Disney Infinity‘s starter pack includes pirate Jack Sparrow, Monsters‘s Sully, and Pixar superhero Mr. Incredible. The family entertainment giant knows its audience, so it’s building this franchise on its more recent characters that appeal to young gamers.

This will be a threat to Activision Blizzard, but the gaming giant caught a break. Disney Infinity was supposed to hit the market by the end of June, but now the release date has been bumped to mid-August. The $75 preorder price also gives Activision Blizzard time to build out its installed base of Skylanders players at a lower price point.

Things will get interesting soon. One winner will naturally be GameStop . At a time when digital gaming is gnawing away at the retailer’s growth, along comes a new platform that requires physical purchases. Best Buy will also naturally benefit from games where starter packs and low-priced additional figures will bring in repeat traffic to its meandering stores. Losers here may include traditional toy makers, as Skylanders and Infinity characters eat into the conventional playthings market.

Forget the battle between Skylanders figures and Disney characters. The real fight here will be between the two franchises. 

Goofy about Disney
It’s easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Is Disney Scared of Activision?

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By Demitrios Kalogeropoulos, The Motley Fool

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Infinity will have to wait a while longer.

Disney‘s ambitious new video game that takes a page from Activision Blizzard‘s blockbuster Skylanders franchise has been bumped from its original June release date. The House of Mouse expects Infinity to hit stores in late August instead.

Delay or not, the company has high hopes for the new game, calling it a “big swing factor ” on the profitability of its interactive business this year. Disney interactive managed to contribute just $9 million to Disney’s operating profit last quarter, by far the lowest of its five business segments. And the unit has been a consistent money loser for the entertainment giant, yanking $216 million, $308 million, and $234 million in profits from its books over the last three years.

There are good reasons to think Infinity could turn that trend around, though. Activision pioneered the retail/digital gaming sector with its Skylanders game, to huge success. By hawking toy accessories as a key part of a console game, Activision has been able to power global sales of more than $1 billion for the franchise in a little over a year.

But the company isn’t resting on that success. It has a big expansion of the franchise in the works, called SWAP Force, which will add the ability for players to interchange toy parts to create new characters and gameplay possibilities. In a clear nod to Disney’s competitive threat, Activision executives had this to say in last month’s earnings conference call: “While others are just entering the category that we created, we’re moving that category forward by introducing yet another innovative new play pattern, dynamic swapability .”

Since it is just a short delay, Disney’s move probably has more to do with the retail calendar than it does worries over the match-up against Activision. Still, a Disney executive told The New York Times that the delay will help the development process. “It gives us a little more time to add bells and whistles and make sure it really sings and pops ,” he said.

Bells and whistles can’t hurt, as this lucrative segment of gaming is about to get a lot more competitive.

Keep playing
It’s easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its monster collection of media networks, much of Disney’s allure for investors lies in its diversity, and The Motley Fool’s new premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch as well as the opportunities and threats the company faces going forward. So don’t miss out — simply click here now to claim your copy of this report today.

…read more
Source: FULL ARTICLE at DailyFinance