Activision Results Hurt by Lack of New Games--2nd Update

By Sarah E. Needleman

Activision Blizzard Inc.'s revenue fell nearly 15% in the second quarter, hurt by the videogame maker again not releasing any major new games during the period.

The largest U.S. game publisher by market capitalization instead leaned on content updates and special events for existing franchises to keep players engaged, just as it did a year ago.

"I'm encouraged by the early momentum of our increased focus across our key franchises," Activision Blizzard Chief Executive Bobby Kotick. The next installment of Call of Duty, due out Oct. 25, includes a new multiplayer mode. A new mobile Call of Duty game is also in the works.

For the second quarter, Activision reported a profit of 43 cents a share on $1.4 billion in revenue, under generally accepted accounting principles, down from 52 cents a share and $1.64 billion a year earlier. On an adjusted basis, Activision Blizzard's results implied a profit of 38 cents a share on net bookings of $1.21 billion -- both down from a year earlier, but better on net bookings than the company's guidance and the average analyst estimate on FactSet.

Digital net bookings fell 16% to $1.01 billion, while monthly active users declined 5% to 327 million. The company did report an increase in the number of hours people played Call of Duty.

Activision Blizzard maintained its full-year outlook on net bookings of $6.3 billion but raised its full-year outlooks on profit and revenue. It now expects profit of $1.41 a share on revenue of $6.19 billion, up from its earlier estimate of $1.18 a share and $6.03 billion, according to generally accepted accounting principles.

Shares of Activision rose 7 cents to $49.40 after hours.

Earlier this year, Activision Blizzard announced plans to eliminate around 775 people from its workforce of about 9,800. It said the 8% head count reduction was part of a restructuring effort aimed at centralizing sales, marketing and other functions -- and that it also planned to hire 20% more developers to create more content for its biggest franchises.

Activision Blizzard's peers -- Take-Two Interactive Software Inc. and Electronic Arts Inc. -- also have reported earnings above expectations for the quarter ended June 30.

The stock prices for all three companies slumped after President Trump criticized the "glorification of violence" in videogames following the weekend's mass shootings that left 31 people dead in El Paso, Texas, and Dayton, Ohio. Two other politicians, House Minority Leader Kevin McCarthy (R., Calif.) and Texas Lt. Gov. Dan Patrick, joined in the criticism, with Mr. Patrick pointing out that Activision Blizzard's Call of Duty was mentioned in the alleged El Paso shooter's manifesto. The stocks have since rebounded.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

(END) Dow Jones Newswires

August 08, 2019 19:02 ET (23:02 GMT)

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