Activision Stock Jumps As ‘Call of Duty’ Drives Impressive Q4 Sales; Microsoft Takeover In Focus

Activision’s merger with Microsoft “will enable us to better serve our players, create greater opportunities for our employees, and allow us to succeed in an increasingly competitive global gaming industry,” said CEO Bobby Kotick.

Activision Blizzard  (ATVI) – Get Free Report moved higher Tuesday after the video game maker posted stronger-than-expected fourth quarter sales, thanks in part to the success of its ‘Call of Duty’ franchise over the holiday season.

Activision said GAAP earnings for the three months ending in December were pegged at 78 cents per share, down 22% from the same period last year and well shy of the Street consensus forecast of $1.51 per share. Group adjusted revenues, however, which exclude deferrals, rose 43.4% to $3.57 billion, firmly ahead of analysts’ estimates of a $3.16 billion tally. In game net bookings rose 46.8% to $1.82 billion, Activision said, with monthly active users nearing 390 million.

Looking into the current quarter, Activision said it sees “last least” a high teens year-on-year percentage growth rate for GAAP revenues, with mid-teens level gains for net bookings.  

“We ended 2022 with record quarterly net bookings as we delivered on our mission to bring epic joy to players,” said CEO Bobby Kotick. “I’m grateful to our talented and hardworking teams for their many successes entertaining our hundreds of millions of players around the world.”

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Activision shares were marked 2% higher in pre-market trading following the earnings release to indicate a Tuesday opening bell price of $73.00 each.

“Our experts have noted a broader flight to quality from gamers over the past year, but believe that Activision Blizzard is well positioned to be a winner of this trend given the strength of its two key franchises, ‘Call of Duty’ and ‘World of Warcraft’,” said Third Bridge analyst Nicholas Cauley.

“The number of released titles during the holiday season has increased the competition for consumer spending, which has tightened at the same time,” he added. “Our experts anticipate a slight drop in ARPU but believe engagement will still remain strong.”

The larger issue for Activision, however, may be the fate of its planned $69 billion takeover by Microsoft  (MSFT) – Get Free Report, which faces pushback from regulators around the world, including Britain’s Competition and Markets Authority, which launched a detail probe into the deal last September. 

Provisional findings from the CMA are expected in the coming days.

“We look forward to a historic year, as we work toward merging with Microsoft,” said Kotick. “This merger will enable us to better serve our players, create greater opportunities for our employees, and allow us to succeed in an increasingly competitive global gaming industry.” 

Late last year, as well, the U.S. Federal Communications Commission said it would challenge the deal in court, arguing the tie-up would “harm competition in high-performance gaming consoles” by denying or degrading access to its gaming content by rival console makers. 

The FTC cited Microsoft’s 2021 takeover of ZeniMax Media, the parent company of game developer Bethesda Softworks, and the group’s decision to make its ‘Starfield’ and ‘Redfall’ games exclusive to its XBox console.

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