By Ian Sherr
Electronic Arts Inc. and Activision Blizzard Inc. reported
favorable trends in their quarterly results and expressed optimism
about the holiday shopping season. But the two videogame companies
have different reasons for being upbeat.
EA said sales of new videogame consoles by Microsoft Corp. and
Sony Corp. were better than expected, and its games made for the
devices also sold well. The company also announced a $750 million
share-repurchase plan and a rosy profit forecast for the fiscal
year.
Activision Blizzard said pre-sales of the latest iteration of
its fantasy online game "World of Warcraft" were among the
strongest in the game's history. That performance came despite a
drop in the number of subscribers it counted playing the game,
falling to 7.6 million at the end of March from 7.8 million at the
end of last year.
The companies' results for the March-ended quarter topped
analyst expectations. Electronic Arts shares jumped nearly 16% in
after-hours trading to $32.40, while Activision rose 1.5% to
$32.40.
Blake Jorgensen, EA's chief financial officer, said many things
have begun working in the company's favor, including increased
customer attention to its sports games, such as its "FIFA" soccer
franchise, and strong sales of games for the new PlayStation 4 and
Xbox One, which were released in November.
Mr. Jorgensen also said sales and game downloads conducted over
the Internet now make up 45% of the company's revenue, the highest
in its history, and will reach 50% next year. Those downloads
benefit the company because they cost less than a typical sale in a
retail store and also provide valuable information about a
customer's purchasing habits, allowing EA to tailor future
advertisements.
In years past, Mr. Jorgensen said, "there was a lot of
frustration that we made great products but couldn't make money."
Now, he said, the company is pulling in more money while still
investing heavily in new games for the coming years.
For its fiscal fourth quarter, EA said profit rose nearly 14% to
$367 million, or $1.15 a share, from $323 million, or $1.05 a
share, in the year-earlier period. Revenue, however, eased to $1.12
billion from $1.21 billion.
Adjusting for items such as deferred revenue and stock-based
compensation, the company put per-share earnings at 48 cents, on
revenue of $914 million. Analysts on that basis had been expecting
per-share earnings of 11 cents on $812 million, according to
average estimates compiled by Thomson Reuters.
EA said it expects an adjusted per-share profit of $1.85 for its
fiscal year, far above analyst expectations of $1.52. Revenue is
expected to be $4.1 billion, roughly in line with expectations.
Activision recently disclosed it is spending $500 million on
"Destiny," a new space-age shooting videogame from the developers
of the blockbuster "Halo" franchise, as part of a decade-long
commitment. Activision has said it expects the game to be a
billion-dollar franchise.
Bobby Kotick, Activision's chief executive, predicted a "long,
useful, valuable life" for "Destiny." "We hope it to be the most
successful new [game franchise] launch we've had," he said.
His company is also preparing to release the newest installment
in its "Call of Duty" franchise, one of the most successful
videogames of all time. The new entry, "Call of Duty: Advanced
Warfare," took three years to make and features popular actor Kevin
Spacey as a villain.
Activision reported first-quarter earnings of $293 million, off
nearly 36% from a year-earlier $456 million. The per-share results
was unchanged at 40 cents, reflecting a higher share count. Revenue
fell 16% to $1.1 billion.
Adjusting for deferred revenue and other items, Activision said
it earned 19 cents a share on $772 million in sales. Analysts on
that basis had been expecting 10 cents a share on $688 million in
sales.
Write to Ian Sherr at ian.sherr@wsj.com
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