It's been slightly more than a week since Activision Blizzard (Nasdaq: ATVI) released its sequel to its wildly popular sci-fi strategy game StarCraft -- a mere 12 years (!) after the original. So far, the second installment in the three-way war between the Terrans, the Protoss, and the Zerg seems to be a hit.
According to the company, more than 1 million copies of StarCraft II: Wings of Liberty sold on the first day, and another half-million flew out the doors on the second day. Like similar events for highly anticipated movies or books (remember those midnight parties for Harry Potter releases?), thousands of GameStop (NYSE: GME) locations were open at midnight to cater to players who couldn't wait just a few more hours. I'm sure those long lines helped the retailer's results.
According to The Wall Street Journal, however, Starcraft II's sales numbers are actually a little bit light when compared to some analyst expectations. But never fear. When Asian sales are reported -- the original StarCraft is a professional sport in Korea -- I'm sure the totals will come in much higher. Analysts expectations range between 5 million copies sold in its first year, and 7 million copies by the end of this year. When Activision reports earnings tomorrow, I wouldn't be surprised to hear management say that the company's sold 3 million or 4 million copies, or more, already.
I also wouldn't be surprised to hear that Activision beat estimates of $0.05 in earnings per share and $720 million in revenue. The company's done so in five of the last six quarters, after all. You'll find an early indication that this might indeed happen in Electronic Arts' (Nasdaq: ERTS) report yesterday. Activision's archrival beat both the Street's view and its own projections on revenue and earnings. Perhaps this signals that the long drought of declining video games sales is nearing an end.
Activision is a current recommendation of our Stock Advisor newsletter service, and I personally argued that the stock was a buy last month, with only a moderately low risk level. With revenue (and earnings!) showing up in the next few quarters from an undeniably successful launch of StarCraft II, not to mention two upcoming expansions, I have no reason to change my mind.
