Thursday after market, Activision Blizzard, Inc. (NASDAQ: ATVI) has announced the fourth quarter financial results. Stock price dropped down 9.53% to $27.62 on Friday morning. Activision Blizzard Inc.'s revenue and profit for the holiday quarter missed market estimates, as strong sales of its latest "Call of Duty" videogame failed to offset lackluster demand for role-playing title "Skylanders: SuperChargers".
The company hasn’t missed on analyst per-share profit expectations in about five years, according to Colin Sebastian, an analyst at R.W. Baird & Co. “This market is unforgiving right now,” he said. “There’s an exaggerated reaction to misses because there’s a lot of uncertainty.”
Along with the profit miss, Activision announced a delay to the sequel of a key game, while results slumped at King Digital Entertainment PLC, the mobile game maker Activision is acquiring.
Activision, also known for its "World of Warcraft" and "Hearthstone" franchises, estimated first-quarter adjusted profit of $0.11 per share on revenue of $800 million.
The company's adjusted net income was 83 cents per share for the fourth quarter ended Dec 31.
Excluding items, revenue fell 4.3% to $2.12 billion from a year earlier, lagging the company's own forecast of $2.15 billion.
According to Thomson Reuters, analysts on average had expected a profit of $0.86 per share on revenue of $2.20 billion.
Videogame companies, as well as Wall Street, focus on adjusted results because under U.S. accounting rules, revenue for online-enabled games is deferred as long as new content is being added.
Meanwhile, the impact of a strong U.S. dollar trimmed $125 million from revenue and 11 cents a share in profit, Activision added.
Activision also partly blamed a soft showing from casual games, such as “Skylanders SuperChargers,” for its subpar fourth quarter. Stores were filled this past Christmas with toys-to-life competitors, such as an “Infinity” game from Walt Disney Co. featuring “Star Wars” characters and a new entrant from Lego A/S called “Dimensions” that included Batman.
Casual players are also shifting to mobile devices, hurting console games such as “Guitar Hero Live,” the company said.