Activision Blizzard Plummets After Plan to Slash 8% of Workforce


Activision Blizzard Inc (NASDAQ: ATVI)

Activision Blizzard Inc on Tuesday reported lower-than-anticipated fourth-quarter revenue and issued a downbeat guidance for its fiscal 2019 first quarter. The company also said that it is slashing its workforce by 8%.

Activision Blizzard is responsible for games such as Call of DutyOverwatch and Hearthstone, but has been facing stiff competition from Fortnite in recent months. Shares of the Santa Monica, CA-based company dropped more than 4.5% in the after-hours session before climbing as much as 2.75%.

The shares rallied 4% in the regular session ahead of the earnings report. ATVI stock has lost about 50% of its value since hitting an intraday high of $84.68 in October 2018.

ATVI Earnings & Outlook

Fourth-quarter GAAP earnings were $0.85 per share, beating analyst estimates of $0.59 per share. Adjusted for items such as share-based compensation, earnings came to $0.90 per share. Analysts surveyed by Refinitiv were expecting adjusted earnings of $1.28 per share.

Bookings, which reflect total business (including deferred revenue) jumped to $2.84 billion from $2.08 billion in the same period a year ago. Analysts were anticipating revenue of $3.04 billion, according to Refinitiv.

For the current quarter, the company is expecting earnings of $0.20 per share, less than the $0.46 per share that analysts polled by Refinitiv have called for. Activision Blizzard also projects revenue of $1.18 billion, which is also below Refinitiv consensus of $1.45 billion.

For the full year, the company views earnings of $2.10 per share compared with analyst expectations of $2.54 per share. Activision Blizzard is also looking for $6.30 billion in revenue, well below $7.25 billion in revenue, based on figures compiled by Refinitiv.

Fiscal 2019 net bookings are expected to fall to $6.30 billion from $7.26 billion and $7.16 billion during 2018 and 2017, respectively.

Activision Blizzard CEO Comments

Bobby Kotick, Chief Executive Officer of Activision Blizzard said,“While our financial results for 2018 were the best in our history, we didn’t realize our full potential. To help us reach our full potential, we have made a number of important leadership changes.”

“These changes should enable us to achieve the many opportunities our industry affords us, especially with our powerful owned franchises, our strong commercial capabilities, our direct digital connections to hundreds of millions of players, and our extraordinarily talented employees.”

Activision Blizzard Profile

Activision Blizzard, Inc. engages in the development and publication of interactive entertainment. It operates through the following segments: Activision, Blizzard, and King. The Activision segment develops and publishes interactive software products and entertainment content, particularly for the console platform.

The Blizzard segment develops and publishes interactive software products and entertainment content, particularly for the PC platform. The King segment develops and publishes interactive entertainment content and services, particularly on mobile platforms, such as Google’s Android and Apple’s iOS. The company was founded in 1979 and is headquartered in Santa Monica, CA. – CNN Money