What Are the Great Opportunities for Activision Blizzard In 2013?

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 opportunity
Activision Blizzard tends to find itself at the right place at the right time.

When massive multiplayer online role-playing games were taking off, Activision Blizzard was there with the World of Warcraft franchise. When music timing games were all the rave, the company was leading the way by arming air guitar strummers with the now defunct Guitar Hero games.

Combat games are still popular now, and Activision Blizzard rules the roost with Call of Duty.

The Skylanders aren't falling
Another example of Activision Blizzard being in the right place at the right time is the Skylanders franchise.

Skylanders Spyro's Adventures was the industry's biggest seller through the first half of 2012. It's a welcome surprise. The game -- combining action figures with traditional video game battles -- gives Activision Blizzard a way to reach out to players beyond the initial sale.

There are now dozens of available action figures that enter the game as they're placed in the console-agnostic portal. The starter pack comes with three action figures, and the young gamers are encouraged to purchase more since each Skylander has unique powers, personalities, and tendencies.

Let's call it Pokemon of Yu-Gi-Oh! for the next generation. Perhaps more importantly, it's winning over young gamers that will eventually move on to play Activision Blizzard's other games.

Surprising consistency
Despite the general malaise surrounding the gaming industry, Activision Blizzard has been able to grow its adjusted profitability year after year.

  • 2009: $0.69 a share in adjusted earnings
  • 2010: $0.79 a share in adjusted earnings
  • 2011: $0.93 a share in adjusted earnings
  • 2012: $1.10 a share in adjusted earnings guidance

Things may not be pretty, but Activision Blizzard has managed to top $1 billion in operating cash flow in each of the past three years.

In November 2012, Activision Blizzard even raised its guidance for all of 2012.

Stay tuned 
Check back for more excerpts from our report on Activision Blizzard, and Fool on!


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  • Report this Comment On July 30, 2013, at 8:20 AM, IlanBigfoot wrote:

    "2009: $0.69 a share in adjusted earnings"

    How come when I look up ATVI's earnings in 2009, I see only 9¢? "adjusted" = way more than real?

    I think you might want to explain "adjusted" more.

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