Activision beats earnings expectations despite bleeding World of Warcraft subscribers

Call of Duty publisher Activision generated $608 million in revenues during the second quarter of its fiscal 2013. That’s slightly better than the $590 million Activision expected.

Activision released a preview of these earnings last week following a move to purchase its independence from Vivendi, which owned a majority stake in the massive game publisher.

“We are pleased with our second-quarter results, which confirm the preliminary results we released last week when we announced our transaction with Vivendi,” Activision chief executive Bobby Kotick said in a statement. “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 the continued strong performance of the Call of Duty and Skylanders franchises as evidence that Activision will still do well after its break from Vivendi. The World of Warcraft massively multiplayer online game, however, is bleeding subscribers. WOW’s down to 7.7 million monthly members. That’s down from 8.3 million last quarter. In 2010, World of Warcraft peaked out at 12 million subscribers worldwide.

”Year to date, we generated a record $434 million in operating cash flow. However, despite this strength in the front half of the year, we remain cautious about the back half,” said Kotick. “The issues we previously identified, including increased competition in the second half of the year and uncertainties surrounding the console transition, remain on the horizon. We are confident that we will continue to successfully navigate industry challenges and find new opportunities to provide superior returns to our shareholders.”

Activision also confirmed that it generated 8 cents earnings per share for the second quarter. That beat its guidance of 5 cents per share.

Based on these results, Activision is revising its 2013 GAAP outlook upward. It now expects to generate $4.31 billion in revenue. It previously estimated 2013 earnings at $4.22 billion. It also expects annual GAPP earnings-per-share to now come in at 77 cents as opposed to 73 cents.

For the next quarter, Activision expects to generate $635 million and 3 cents per share.

In a call with investor today, Kotick said that next-gen systems were causing some gamers to hold off on making purchasing decisions.