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The world's largest home entertainment software maker, Activision Blizzard (NASDAQ: ATVI ) has seen its fair share of bullishness lately. Indeed, it finds its shares up nearly 40% since the beginning of 2013 after posting better-than-expected fourth-quarter and full-year results in early February. Going beyond that, the company has another exciting year in store for it.
How will Activision keep up the positive momentum for its shareholders? To answer the question, the Fool compiled a research report to break down the each critical facet of the Activision investment thesis. We've included an excerpt from one section below for our readers. Enjoy!
The three areas you MUST watch
Activision Blizzard investors haven't had it easy during the past few years. Like its Skylanders franchise, the stock's stuck in the pre-teens. However, there are some things that Activision Blizzard bulls can get excited about.
Let's go over a few catalysts for potential growth.
Let's go shopping: Activision Blizzard has no debt and more than $3 billion in cash and investments on its balance sheet. With analysts projecting meager organic growth in the near term, a shopping spree may be in order.
Smaller rival Electronic Arts and social gaming leader Zynga have been snapping up digital gaming companies. There's certainly an opportunity there, though Activision Blizzard may feel as if it has enough online ammo on its own.
However, beefing up its traditional gaming franchises at a time when the sector is out of favor can be compelling. It can pick up Take-Two Interactive to get its hands on the Grand Theft Auto franchise ahead of its upcoming springtime release in 2013.
Digital gaming is an opportunity: Digital revenue has always been a big part of the Activision Blizzard business, propelled by Blizzard's online and PC games. On a non-GAAP basis, Activision Blizzard's net revenues from digital operations accounted for 57% -- or $427 million -- of the quarter's total net revenues.
There are even bigger opportunities in the future. Digital gaming isn't just a matter of moving subscriptions and selling virtual goodies. Despite seeing its stock get obliterated in its brief public tenure, Zynga continues to command a multi-billion market cap solely as a digital gaming company.
Activision Blizzard is hoping that new digital opportunities make future installments of its marquee franchises even more valuable. Investors will get a glimpse of that strategy in action once we get a glimpse of the metrics arising from the mid-November launch of Call of Duty: Black Ops II.
It can be truly a world of war and craft for Activision Blizzard: Activision Blizzard has generated more than half of its revenue in the U.S. over the years, but the rest of the world is catching up. International sales now make up nearly half of the company's revenue.
Things can better, especially in China. Activision Blizzard has turned to two of China's biggest players to introduce its games into the world's most populous nation. NetEase.com has been rolling out World of Warcraft in China since 2010, and Tencent was tapped for an online version of Call of Duty.
Another gaming great?
Zynga's post-IPO performance has been dreadful, and investors are beginning to wonder if it's "game over" for this newly public company. Being so closely tied to the world's largest social network can be a blessing and a curse. You can learn everything you need to know about Zynga and whether it's a buy or a sell in our new premium research report. Don't even think about picking up shares before you read what our top analysts have to say about Zynga. Click here to access your copy.