Activision Blizzard reported better-than-expected earnings for its fiscal fourth quarter ended Dec. 31. But it warned that 2013 will be a tougher year.
[aditude-amp id="flyingcarpet" targeting='{"env":"staging","page_type":"article","post_id":618705,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"games,","session":"C"}']The success of last fall’s Call of Duty: Black Ops II and Skylanders: Giants drove sales. On a non-GAAP basis, the earnings per share were 78 cents, compared with 62 cents a year earlier and 6 cents above expectations. Revenue was $2.6 billion on a non-GAAP basis, compared with $2.4 billion a year earlier. For the fourth quarter, analysts expected 72 cents a share on revenue of $2.44 billion.
But in 2013, Activision Blizzard may have tougher comparison, since it is not releasing Diablo III or an equivalent game this year. Diablo III sold 10 million-plus units and generated 20 cents in earnings per share in 2012, according to analyst Ben Schachter.
Activision Blizzrd CEO Bobby Kotick said in a statement, “We are very pleased to report that Activision Blizzard delivered the best performance in its history. With better-than expected net revenues, record operating margins and record earnings, and over $1.3 billion in operating cash flow, we continue to set the industry success bar. I would like to thank our incredibly talented employees around the world for their passion, drive, and creativity, which continues to fuel our success.”
Kotick added, “As we look to 2013, we will continue to invest in our established franchises as well as several new properties. We expect these investments to drive our growth over the long term and to enable us to deliver superior returns to our shareholders in the years to come. In the short term, we expect to continue delivering strong profitability, but below our record-setting 2012 performance due to a challenged global economy, the ongoing console transition, and a difficult year-over-year comparison because of Blizzard’s record-shattering Diablo III success in 2012.”
For 2013, Activision Blizzard said its outlook is for 80 cents a share in net income and revenues of $4.2 billion. For the first quarter of 2013, Activision said it expects earnings of 10 cents a share on non-GAAP revenues of $690 million. Analysts expected non-GAAP earnings per share of 98 cents for 2013 on revenue of $4.6 billion.
But in 2013, Activision Blizzard may have tougher comparison, since it is not releasing Diablo III or an equivalent game this year. Diablo III sold 10 million-plus units and generated 20 cents in earnings per share in 2012, according to analyst Ben Schachter at Macquarie Equities Research.
Retail sales of games fell 21 percent in the U.S. in 2012.
Fourth quarter revenues were $1.77 billion on GAAP basis, compared with $1.41 billion a year earlier. GAAP earnings per share were 31 cents, compared with 8 cents a share a year earlier.
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For the calendar year, GAAP revenues were $4.86 billion, compared with $4.76 billion a year earlier. Non-GAAP revenues were $4.99 billion, compared with $4.49 billion a year earlier. Revenues from digital channels were $1.54 billion, or 32 percent of the total. Non-GAAP Net revenues from digital channels were a record $1.6 billion.
For calendar year 2012, Activision Blizzard said earnings per share were share of $1.01, compared with 92 cents a share for 2011. On a non-GAAP basis, the company said earnings per share were $1.18, compared with 93 cents a share a year earlier.
In a conference call, Kotick said that Skylanders sold more than $1 billion to date and 100 million toys. He said Nintendo Wii U sales were lower than expected and that an industry transition was in the works as the industry awaits the launch of new game consoles.
Chief financial officer Dennis Durkin said that the outlook is lower for 2013 in part because of the console transition and lower predicted sales of Call of Duty for 2013 compared to 2012, and lower revenues for World of Warcraft in 2013 compared to 2012.