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Game On: Activision Blizzard vs. Take-Two vs. EA

NEW YORK (TheStreet) -- Activision Blizzard (ATVI - Get Report) reported after the bell Thursday, the last big name in the video game industry to do so. It was game on after Electronic Arts (EA - Get Report) kicked off with next-gen game supremacy last week and Take-Two Interactive (TTWO - Get Report) reported a massive surge in profitability on Monday.

The response to Activision's fourth-quarter has been positive, sending shares to a five-year high. By mid-afternoon, shares surged 14.5% to $19.66. EA and Take-Two came along for the ride, up 3.3% and 3.2%, respectively.

Despite a first-quarter outlook on the soft side, Activision's sales exceeded holiday season expectations on the back of its Call of Duty franchise. In the three months to December, Activision generated $2.27 billion in sales, higher than consensus of $2.22 billion according to Thomson Reuters­-surveyed analysts.

It was a stellar year for the video game company with its Activision Publishing subsidiary ranking as the number one console and handheld publisher in North America and Europe combined, with its second and third best-selling franchises Call of Duty and Skylanders.

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Expectations are high for the Santa Monica-based company's next billion-dollar title, Destiny, set to launch in September.

"We have the strongest and most diverse pipeline of games in our history. In 2014, we expect these releases to enable us to grow non-GAAP revenues year over year and generate record non-GAAP earnings per share," said CEO Bobby Kotick in a statement.

Separate subsidiary Blizzard Entertainment's World of Warcraft retained its title as the number one subscription-based MMORPG (massively multiplayer online role-playing game) with a total 7.8 million subscribers.

"In our pipeline for 2014 and the next few years are at least three potentially groundbreaking new free-to-play franchises-Blizzard's Hearthstone: Heroes of Warcraft and Heroes of the Storm, and Activision Publishing's Call of Duty Online. We believe these games have great global potential," added Kotick.

Despite a full schedule of new releases, management guided first-quarter revenue of $675 million, below expectations of $687.4 million, and net income of 10 cents a share, a penny short of consensus. Full-year earnings of $1.26 a share is three cents under forecasts.

Where Activision has a full docket of upcoming products, Take-Two's pipeline is looking sparse and Wall Street took notice. Shares dove nearly 10% on Tuesday after New York-based Take-Two said it expects fourth-quarter earnings break-even to 10 cents a share, compared to analyst consensus of 13 cents. Forecast revenue between $170 million and $200 million is 44% to 34% lower than the year earlier.

At least the most recent quarter proved a triumph. In the three months to December, Take-Two managed to more than double profit on the release of its leaderboard game Grand Theft Auto V, a title that took five years from concept to completion.

Third-quarter net income of $210.7 million, or $1.70 a share, was 167% higher than the year-ago quarter, thanks to GTA V's success as it soared to the number one spot as the top-selling title of 2013 (even though it was released three-quarters into the year), according to NDP data.

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ATVI $38.57 2.42%
EA $68.63 1.24%
TTWO $35.99 1.75%
AAPL $117.34 -0.81%
FB $107.12 2.76%


Chart of I:DJI
DOW 17,888.35 +168.43 0.95%
S&P 500 2,102.63 +22.22 1.07%
NASDAQ 5,156.3060 +47.64 0.93%

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