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Activision Exceeds Expectations With Profit Increase
Activision Exceeds Expectations With Profit Increase
May 6, 2010 | By Leigh Alexander

May 6, 2010 | By Leigh Alexander
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Activision is weathering its recent legal battles and dramatic headlines just fine, smashing expectations in its fiscal first quarter. The company reported non-GAAP revenue of $714 million for the quarter ending March 31st, 2010 -- over $100 million more than even the top-end analyst estimate.

Its GAAP revenue for the quarter came in at $1.3 billion, and Activision also about doubled its profits to $381 million, as compared to $189 million in last year's first quarter.

Of course, Modern Warfare 2 and World of Warcraft bear most of the credit for the strong performance -- the former was the quarter's top-selling title in the U.S. and Europe, the publisher says, pointing to "continued momentum" for its catalog.

It also saw strong sales of DreamWorks movie tie-in How To Train Your Dragon, and the record-breaking Xbox Live sales performance of Call of Duty: Modern Warfare 2's Stimulus Package DLC: Priced at $15, it sold 1 million units on Xbox Live on day one, and over 2.5 million in its first week, Activision has said.

CEO Bobby Kotick said the company has given its shareholder a 28 percent return as of the first quarter. "We continue to find ways to add profitable franchises that allow us to increase our operating margins," he says, pointing to the company's 10-year Bungie deal.

"This relationship will allow Activision to broaden its product portfolio with exciting new games and underscores our commitment to partnering with the best creative talent in the industry, Kotick added.

And, confronting criticisms of the publisher amid the exodus at Infinity Ward, on the company's earnings call to investors, Kotick first and foremost credited the "dedication" of the company's total 7200 "exceptionally talented" employees.


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Comments


Brent Thale
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The article appears to be confusing some GAAP vs non-GAAP numbers, I do realize that's very easy to do since GAAP complicates financial reporting immensely.



I believe the first paragraph should read "reported sales up 33 percent to $1.308 billion", since the $714 million number was for non-GAAP revenue, and non-GAAP revenue actually declined year-over-year from $724 million.



Also, saying "Including deferred revenue -- money it plans to pocket from subscriptions already on the books" is quite misleading since deferred revenue in this case has to do with unrealized revenue already reported in the non-GAAP numbers for the Christmas quarter for online-enabled games like Modern Warfare 2, it is not about subscriptions.

T K
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exactly. misleading title. investors go on non-gaap numbers not the gaap numbers. sales were down slightly on a year/year basis. also guidance for full year still implies -7% revenue growth on non-gaap basis. operating margins however expanding from 26% to 29%. the implosion in revenue in music and a lower revenue from from call of duty is main reason from lower revenue in 2010 even with the launch of starcraft 2 and catalclysm. the higher margins however are a direct result of the mix shifting from low margin music to the very high margin blizzard products. net, net outlook was unchanged for the year, albeit its conservative and ATVI will likely beat this current guidance.

Simon Carless
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Brent/TK, thanks for the heads up - these new GAAP-infused earnings are complex. We've corrected and enhanced the article.


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