Video game company Activision Blizzard (NASDAQ:ATVI) topped analysts’ third-quarter expectations, even as both revenue and earnings declined from the prior-year quarter. Q3 revenue declined 14% year-over-year to $1.78 billion, while adjusted earnings per share (EPS) fell nearly 24% to $0.68. Analysts expected adjusted EPS of $0.50 on revenue of $1.7 billion.
The company blamed the year-over-year decline on the “reduced engagement for Call of Duty following the weaker reception for last year’s premium release.” Meanwhile, net bookings declined about 3% to $1.83 billion in the quarter.
ATVI – MSFT Deal
Activision Blizzard shares were muted in Monday’s extended trading session as investors seemed to be more interested in the closure of the company’s proposed acquisition by Microsoft (MSFT). Investors are concerned that the $69 billion acquisition by Microsoft could be opposed by regulators. Meanwhile, Activision continues to be optimistic about the deal.
That enthusiasm shone through in a commend by Bobby Kotick, CEO of Activision Blizzard. He said, “We look forward to continuing to release epic entertainment in service of our global community of players as a part of Microsoft, one of the world’s most admired companies. We continue to expect that our transaction will close in Microsoft’s current fiscal year ending June 2023.”
Gamers Grabbing Up Call of Duty in Q4
The company expects its Activision segment’s Q4 revenue and operating income to return to “strong” year-over-year growth following the successful launch of Call of Duty: Modern Warfare II. Overall, Q4 revenue is expected to be “5% lower year-over-year or better.” Net bookings and overall segment operating income are projected to grow at least 20%.
Activision separately announced that its Call of Duty: Modern Warfare II crossed $1 billion in worldwide sell-through in the first 10 days from its release on October 28, 2022.
The ATVI price prediction is $93.17, which indicates an upside of 31.04%.
