SANTA MONICA, Calif. (
shares are down more than 6% after second quarter sales fell short of analysts' forecasts.
The company saw earnings rise during the second quarter, but revenue was down despite the highly anticipated release of its new video game,
For the quarter ended June 30, the company saw earnings rise 12.3% to $219 million, or 17 cents per diluted share, compared with earnings of $195 million, or 15 cents per diluted share, in the same period a year ago. Excluding special items, earnings were 6 cents per diluted share, slightly ahead of analyst estimates of 5 cents a share.
Kaufman Brothers analyst Todd Mitchell said shares took a dive based on the lackluster revenue results and management's lowering of guidance for the third quarter.
Revenue fell 6.8% to $967 million from $1.04 billion during the quarter. Higher revenue from its subscription and licensing segment was offset by a decrease in product sales.
"Our quarterly results were fueled by continued strong consumer response to Activision Publishing's
Call of Duty
franchise and Blizzard Entertainment's
World of Warcraft
," said CEO Robert Kotick. "Looking to the balance of the year, we expect to release the best slate in our company's history. Blizzard Entertainment's
StarCraft II: Wings of Liberty
is off to a strong start worldwide with midnight openings on July 27, 2010 at 3,100
stores in the U.S. and 8,000 retailers around the world."
Mitchell mentioned that analysts had expected the release of
in the Asian and Korean markets to be an instant hit. However, the international selling model is much different than the one in North America, and revenue from sales will build slowly as consumers demo games before purchasing them.
For the first half of the year, earnings rose 56.3% to $600 million, or 47 cents per share, compared with earnings of $384 million, or 28 cents per share, in the same period a year ago.
Revenue rose fell 12.7% to $2.28 billion from $2.02 billion.
The company is also looking forward to releasing a several new games in the near future, and increased its expectations for the
Call of Duty
brand in the fourth quarter.
"We are, of course, enthusiastic about Blizzard Entertainment's upcoming release of
World of Warcraft: Cataclysm
, which began a closed beta test on June 30," Kotick said.
Even with Activision Publishing moving the release date for its new game,
True Crime: Hong Kong
from 2010 to 2011, the company reaffirmed its 2010 outlook. It still expects GAAP net revenues of $4.2 billion and earnings of 49 cents per diluted share.
Activision Blizzard shares are down more than 6% to around $11.
-- Reported by Theresa McCabe in Boston.
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