Pachter: Activision/Blizzard To Reach $5B In Sales Through 2009

With the deadline approaching for the Activision/Vivendi merger approaching, Wedbush Morgan's Michael Pachter has raised estimates for the company's fiscal and calendar years, expecting sales of $5.26 billion over the next 12 months. Pachter has also raised estimates for the 9 months ending December 2008 to $3.70 billion, including $850 million from Vivendi divisions Blizzard and Sierra, and "incremental contribution from the recently announced Guitar Hero World Tour." $1.6 billion of the calendar year estimates come from Blizzard and Sierra. "We were initially skeptical about the Activision's ability to grow revenues on a standalone basis," said Pachter, "but upon reflection and review of Activision's game lineup, it is apparent to us that the company can do so." With initial sales targets of 13 million units of Guitar Hero, Pachter says the recently announced full-band version, Guitar Hero World Tour, might "cannibalize sales of the competitive Rock Band product, and the backward compatibility of the multi-instrument product should allow the company to retain the loyalty of many prior Guitar Hero customers." "As we look forward into 2009, there are several things that give us confidence in Activision-Blizzard's further ability to grow," he concludes, citing a prospective Starcraft MMO, "which should generate several million disc and download sales, and which should allow Blizzard to grow its subscriber base," also citing the end of Blizzard's Asian contract with The9, "allowing a renegotiation of the royalty rate from the current 22% level."