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Weak Wii U, console transition have Activision wary for 2013

Activision Blizzard released its fiscal year earnings results to investors today. While World of Warcraft subscribers are down globally, Skylanders keeps the publisher strong.
Activision Blizzard released its fiscal year earnings results to investors today, offering up a look at the performance of its many franchises and services over the past year. Company CEO Bobby Kotick summed up the challenges facing the publisher thusly: "The shift in release dates of competing products, the disappointing launch of the Wii U, uncertainties regarding next-generation hardware, and subscriber declines in our World of Warcraft business all raise concerns, as do continued challenges in the global economy. For these reasons, we remain cautious." Overall, Activision Blizzard reported a strong year well in excess of projections. Q1 EPS came in at $0.17, 6 cents ahead of analyst estimates. Revenue for the quarter is reported at $1.32 billion versus the $705.04 million projected by consensus. Some key takeaways from Activision Blizzard's fiscal results:
  • Overall fiscal year revenues exceeded consensus estimates, drawing in an expected $4.25 billion, over the previously projected $4.175 billion.
  • World of Warcraft still dominates the MMORPG market with 8.3 million subscribers worldwide, but suffered losses of 1.2 million subscribers over the last year, predominantly in Eastern markets.
  • Activision dominated the quarter with Skylanders and Call of Duty as the #1 and #2 best-selling properties in the U.S. and Europe.
  • StarCraft II: Heart of the Swarm moved 1.1 million copies in its first 48 hours of sale, but Activision does not break this figure down by digital versus retail.
  • GAAP Net Revenue for Wii and Wii U combined comprised a mere 2 percent of Activision's overall net revenue in the recent quarter, reflecting the publisher's ambivalence to commit to the new console.
  • Net revenue in the same period from online subscriptions went down 7 percent versus last year.
Activision Blizzard's stock closed today at $15.26/share, up 2.14 percent. However, stock price then fell 5 percent to $14.49/share during after-hours trading.

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