Activision Blizzard Swings To Q3 Loss, But Tops View

(RTTNews) - Activision Blizzard Inc. (ATVI) on Tuesday reported a swing to loss in the third quarter from a profit last year, hurt largely by effects of changes in deferred revenues and other one-time items. Nonetheless, the video game publisher's adjusted profit and revenues easily trumped Wall Street expectations, driven largely by strong sales of the new shooter game Destiny and World of Warcraft.

Santa Monica, California-based Activision reported a third-quarter loss of $23 million or $0.03 per share, compared to a profit of $56 million or $0.05 per share last year.

Excluding one-time items, adjusted earnings for the third quarter rose to $0.23 per share from $0.08 per share a year ago. On average, 22 analysts polled by Thomson Reuters expected earnings of $0.13 for the quarter. Analysts' estimates typically exclude special items.

Activision's third-quarter revenues grew to $753 million from $691 million a year ago. Adjusted revenues, which excludes changes in deferred revenues, surged to $1.17 billion from $657 million last year. Analysts had a consensus revenue estimate of $1.01 billion for the third quarter.

CEO Bobby Kotick said, "Our record third-quarter results were driven by Destiny, the biggest new videogame franchise launch of all time, as well as strong sales from Blizzard Entertainment's Diablo III: Reaper of Souls - Ultimate Evil Edition, Hearthstone: Heroes of Warcraft, which now has over 20 million registered players, and World of Warcraft, which saw a quarterly increase in subscribers to 7.4 million in anticipation of the upcoming Warlords of Draenor release."

Video game publishers like Activision and Electronic Arts (EA) have benefited from demand for games for the next-generation consoles, Microsoft Corp.'s (MSFT) Xbox One and Sony Corp.'s PlayStation 4 launched last fall. Next-gen consoles sales for the quarter were $468 million, representing 40 percent of adjusted revenues.

Looking forward to the fourth quarter, the company expects adjusted earnings of $0.86 per share and adjusted revenues of about $2.200 billion. Analysts currently expect earnings of $0.94 per share on revenues of $2.34 billion for the quarter.

For the full year 2014, the company now expects adjusted earnings of $1.35 per share and adjusted revenue of $4.800 billion. Analysts currently expect earnings of $1.33 per share on revenue of $4.75 billion for 2014. Previously, the company expected adjusted earnings of $1.29 per share on adjusted revenues of $4.700 billion for 2014.

ATVI closed Tuesday's trading at $19.95, down $0.35 or 1.72%, on the Nasdaq. The stock further gained $0.70 or 3.51%, in the after-hours trade.