Blizzard-Activision Posts Q4 Loss Despite Record Revenue
#1
02-13-2009 | 12:11 AM
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Blizzard-Activision Posts Q4 Loss Despite Record Revenue
This is disturbing news. I hope this doesn't really spell the end of PC gaming.
Activision Blizzard posts Q4 loss despite record revs
Call of Duty: WAW, Guitar Hero World Tour, and Wrath of the Lich King help mint $2.3 billion in three months; megapublisher still loses $72 million but rules out "mass layoffs"; Wii DJ Hero confirmed for this year, Starcraft II beta coming in "next few months."
The past several weeks have seen a steady stream of dreary financial results, with THQ, Sega, Sony, and Electronic Arts all announcing losses and layoffs. However, several companies have issued positive earnings reports, including Ubisoft, Take-Two, and Nintendo.
Today, the biggest third-party publisher of them all, Activsion Blizzard, weighed in with an earnings announcement that's both good and bad. On the one hand, the company's record $2.3 billion in October-December net revenue beat the $2.15 billion a Thomson Reuters survey of analysts had predicted. On the other, the company posted a $72 million loss during a quarter when it launched new entries in its three biggest franchises: Guitar Hero World Tour (October 26), Call of Duty: World at War (November 10), and World of Warcraft: Wrath of the Lich King (November 13).
Activision Blizzard CEO Bobby Kotick played down the loss with a backhanded dig at staff-cut-beset competitors. "We won't be distracted by layoffs and restructuring and things that other companies are going to be distracted with," Kotick told Reuters. "We don't respond to managing our operating expenses because there's a financial crisis, we do it all the time."
Despite Kotick's upbeat tone, the markets reacted swiftly and negatively. In after-hours trading, Activision Blizzard's stock was down over 5 percent, trading at $9 as of press time.
Speaking with analysts in a conference call, Activision Blizzard CFO Thomas Tippl said that the company may take advantage of the dismal economic climate to add talent to its internal roster. "A long, challenging economic environment may provide acquisition opportunities due to strong cash position," he said. According to Kotick, Activision Blizzard currently has over $3 billion in cash reserves with zero debt load.
Call of Duty: WAW, Guitar Hero World Tour, and Wrath of the Lich King help mint $2.3 billion in three months; megapublisher still loses $72 million but rules out "mass layoffs"; Wii DJ Hero confirmed for this year, Starcraft II beta coming in "next few months."
The past several weeks have seen a steady stream of dreary financial results, with THQ, Sega, Sony, and Electronic Arts all announcing losses and layoffs. However, several companies have issued positive earnings reports, including Ubisoft, Take-Two, and Nintendo.
Today, the biggest third-party publisher of them all, Activsion Blizzard, weighed in with an earnings announcement that's both good and bad. On the one hand, the company's record $2.3 billion in October-December net revenue beat the $2.15 billion a Thomson Reuters survey of analysts had predicted. On the other, the company posted a $72 million loss during a quarter when it launched new entries in its three biggest franchises: Guitar Hero World Tour (October 26), Call of Duty: World at War (November 10), and World of Warcraft: Wrath of the Lich King (November 13).
Activision Blizzard CEO Bobby Kotick played down the loss with a backhanded dig at staff-cut-beset competitors. "We won't be distracted by layoffs and restructuring and things that other companies are going to be distracted with," Kotick told Reuters. "We don't respond to managing our operating expenses because there's a financial crisis, we do it all the time."
Despite Kotick's upbeat tone, the markets reacted swiftly and negatively. In after-hours trading, Activision Blizzard's stock was down over 5 percent, trading at $9 as of press time.
Speaking with analysts in a conference call, Activision Blizzard CFO Thomas Tippl said that the company may take advantage of the dismal economic climate to add talent to its internal roster. "A long, challenging economic environment may provide acquisition opportunities due to strong cash position," he said. According to Kotick, Activision Blizzard currently has over $3 billion in cash reserves with zero debt load.
Last edited by Barrister; 02-13-2009 at 12:13 AM.
#3
02-14-2009 | 07:29 AM
wow...
I'd like to take a look at some of the real (war room with redbull kind) balance sheets for the company. How are you making the worlds most popular games and not making money?!
#5
02-18-2009 | 07:18 PM
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I can assure you if you split the Blizz-Activision sheets you would find that Blizz is making a killing and Activision is losing. You have to keep in mind that Activision is primarily a publisher wheras Blizz is primarily a developer. The D/E and cash is pretty nice though.
Last edited by Dynamic; 02-18-2009 at 07:23 PM.
#6
02-18-2009 | 08:09 PM
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Activision has the tony hawk line, cod, etc. Even if they are just the publisher their overhead should be lower and those titles sell like theres no tomorrow. I would think a 12 year old could run that company well into the black...
#7
02-18-2009 | 08:33 PM
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Their overhead doesn't work exactly like you would think. In a brash generalization publishing is almost like retailing. Consolidated COGS was 1.2B alone for Q4.
When you look at GAAP rev, which was 1.6B, and you subtract those "publishing" costs on top of the COGS and there is your loss. You have to remember that three major titles launched in Q4, including one with bundled accessories at 3x the avg. software price.
Tony who? lol
When you look at GAAP rev, which was 1.6B, and you subtract those "publishing" costs on top of the COGS and there is your loss. You have to remember that three major titles launched in Q4, including one with bundled accessories at 3x the avg. software price.
Tony who? lol
Last edited by Dynamic; 02-18-2009 at 08:37 PM.
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