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Activision Blizzard shares drop following Vivendi sale reports
Activision Blizzard shares drop following Vivendi sale reports
June 7, 2012 | By Mike Rose

June 7, 2012 | By Mike Rose
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Activision Blizzard shares have dropped following reports that parent company Vivendi is considering selling it off later this month.

Activision and Vivendi first signed an agreement to combine Vivendi Games, Vivendi's interactive entertainment business, with Activision back in 2007, creating the world's largest pure-play online and console game publisher.

According to Bloomberg, Vivendi will discuss the part or full sale of the Call of Duty and World of Warcraft house during an investor meeting on June 22, as the Paris, France headquartered company considers what to do with its 61 percent stake in Activision.

Vivendi chairman Jean-Rene Fourtou is eager to sell Activision, says Bloomberg's sources, as a move to unlock value from assets that are currently discounted, due to the holding structure within the company.

The company has suffered a 28 percent slide in stock price over the past 12 months, and hence is looking for ways to reserve its finances.

Since the report appeared earlier today, Activision Blizzard's share price has dropped by 3.3 percent to $11.70 per share, while Vivendi's has jumped 3.8 percent to $13.61 per share.

Activision Blizzard most recently beat expected financial results for its fiscal first quarter, despite seeing revenues fall by more than 20 percent.


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Comments


Ramin Shokrizade
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I'm not sure I understand this, if someone can explain this to me I would appreciate it. I would think they would at least want to wait to see how their D3 product is going to translate to revenue before unloading Blizzard. I published some warnings about the efficacy of the D3 RMAH six months ago (http://gameful.org/groups/games-for-change/forum/topic/smedleys-d
ream-part-i-ii/), and I would imagine they would have high hopes for it unless they were now coming to similar conclusions.

Bret Dunham
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Perhaps the recent settlement with ex infinity ward employees may have an impact on next quarters profits?

Nathan Zufelt
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They may just be looking to cash in some shares but still keep a majority holding. They could sell 10% of the company (over a billion worth of shares) and still be the controlling shareholder.

It's doubtful that announcing the intention to sell had anything to do with today's price drop. Most of the market is down roughly 3% after a big jump yesterday. Things are just settling.

Michael Wenk
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The success or failure of individual titles are likely not causing this. This likely related to the fact that ATVI isn't really a growth issue anymore, and Vivendi probably want the equity they have locked in ATVI out to use on growth.

Ramin Shokrizade
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All great comments. So the consensus is that they have liquidity issues and this is their solution?

Nathan Zufelt
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I have no idea if they have liquidity issues, feel free to check their financials, Vivendi is a massive media and telecommunications conglomerate. It's definitely possible for them to cash out without losing their majority share.

They recently sold their stake in NBC/Universal as well.

Jason Schwenn
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Nice blog post Ramin. Great point on prestige being just as important as scarcity; and I agree that allowing prestige items to be sold will just continue to lower the ceiling on the value of their 'products'.

Kevin Cardoza
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@ Ramin: Yes, the problem is liquidity issues. Vivendi's previous management went on an acquisition bender while at the same time many of those acquisitions ended up not performing well, which has left the company owning a ton of disparate entities but having very little cash on hand to improve themselves.

So, on the contrary, they probably want to sell Activision Blizzard now while it's probably at it's peak worth.

Adam Smith
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As suspected, the sale is being considered to accomplish two things: 1. free up liquidity, and 2. try to improve valuation for the rest of Vivendi. We know what ATVI is worth, it's shares are priced daily. The rest of Vivendi is a bit more opaque in terms of valuation. In recent months, Vivendi's mobile operator in France, SFR, is getting its A$$ handed to it by Iliad/Free, an MVNO which is undercutting rates for established market players and taking subs fast. The stock (VIV) has been hammered and shareholders are pushing mgmt to act. Plus, the rationale for integration of ATVI with SFR, Brazilian broadband, Maroc Telecom, Canal Plus and UMG is shaky at best. The cash will help them (a bit). Valuation improvement is much more unlikely IMHO (see TWX).

Bernie M
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Nice article and nice comments. I would also add that AAA core game development is a cutthroat business. Just 1 misstep and the backlash could even reach Vivendi. Like the rushed Mass Effect ending ended in EA being the worst company in the US (lol).


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