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What’s in store for Activision Blizzard?

What’s in store for Activision Blizzard?

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Activision Blizzard (ATVI, $79.48) seemed to dodge the analyst doom-mongers with its Q2 earnings. Numbers showed that bookings hit $1.64 billion, slightly better than analysts expected ($1.59 billion). However, despite beating analyst expectations, it still came in lower year-on-year, with Bookings down from the $2.3 billion in the year-earlier quarter and earnings per share of 36 cents, compared to $1.12 a year earlier. The company explained that it saw lower engagement for its Call of Duty franchise and lower bookings for World of Warcraft.

The gaming publisher did not issue guidance for the upcoming quarters due to its pending acquisition by Microsoft, however, it said it expects GAAP revenue and EPS to remain lower year-over-year in the second half of the year. Microsoft expects its $68.5 billion acquisition of Activision Blizzard will be approved by regulators in the current fiscal year ending June 30, 2023. A combination of the Q2 results and impending acquisition saw the stock slightly tick up at $80.32 a share. 

The company also converted close to 1,100 US temporary and contingent employees to full-time workers, as part of a larger union push with the company. This change raised workers’ minimum hourly wage to at least $20 an hour, which will likely also bring added costs.

Why it matters

The gaming industry is undergoing a serious hangover following its explosive growth during the pandemic. Both Microsoft (MSFT, $278.03) and Sony (SONY, $86.08) reported slowdowns in software sales and user engagement during their latest earnings. Microsoft, which doesn’t break out revenue for its Xbox products, said services revenue fell 6% year-over-year. Sony, for its part, reported a 13% year-over-year decline in software revenue. 


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