Activision Blizzard Profit Tops View, But Details Poor Outlook; Share Up 8%

(RTTNews) - Activision Blizzard Inc. (ATVI) on Thursday reported a drop in profit for the fourth quarter, as revenues continued to decline. Nonetheless, the video game publisher's profit easily trumped Wall Street expectations, as did revenues.

Moving ahead, the company detailed a weak financial outlook for the first quarter and full year 2014, which is expected to miss current Wall Street expectations. Activision shares jumped eight percent on the New York Stock Exchange in extended trade.

Santa Monica, California-based Activision's fourth-quarter profit dropped to $174 million or $0.22 per share from $354 million or $0.31 per share last year.

Adjusted earnings were $0.79 per share for the quarter. On average, 25 analysts polled by Thomson Reuters expected earnings of $0.73 per share for the quarter. Analysts' estimates typically exclude special items.

Activision's Fourth-quarter revenues decreased to $1.52 billion from $1.77 billion last year. Adjusted revenues, which exclude effects of change in deferred revenues, dropped to $2.27 billion from $2.60 billion last year. Analysts expected revenues of $2.22 billion for the quarter.

Like most of its competitors in the industry, Activision Blizzard also seem to be struggling to improve its sales growth as the video game industry is on a transformational stage with the launch of next-generation consoles Xbox One and PlayStation 4.

"2013 was a transformational year for Activision Blizzard and for our industry," Chief Executive Bobby Kotick said in a statement.

Meanwhile, the video-game publisher said its shooter game franchise "Call of Duty" and toy-based game "Skylanders" came in at number 2 and 3 positions for best-selling games in North America and Europe.

Activision also faces challenge posed by the change in consumer preference, as more and more gamers now seek the low-ticket mobile games played on smartphones and tablets.

Looking forward to the first quarter, Activision expects earnings of $0.15 per share, adjusted earnings of $0.09 per share, revenues of $885 million and adjusted revenues of $675 million. Analysts currently estimate earnings of $0.11 per share on revenues of $678.97 million for the quarter.

For the full year 2014, the company now sees earning of $0.76 per share, adjusted earnings of $1.26 per share, revenues of $4.00 billion and adjusted revenues of $4.60 billion. Analysts currently anticipate earnings of $1.27 per share with revenues of $4.65 billion for the year.

ATVI closed Thursday's trading at $17.17, up $0.28 or 1.66%, on the Nasdaq. The stock further gained $1.43 or 8.33% in after-hours trade.