Activision - ATVI

[KC Scott]

These are the guys that make...........



Very nice balance sheet also - no debt -

Earnings out next week - and if the lines I saw at Best buy are any indication, GH3 is a monster hit already.

Looking at the chart, I think the Market maker will try to take it down around $22 (before the earnings call $21,88 is the 50DMA) so put in your limit orders around there if your interested.

[KC Scott]

Activision beat earnings by a penny and guided 18% higher for the quarter.

I had a buy order in at $21.50 and it missed by a dime today :(

Got busy and didn't have time to watch it.

Still think it might pull back one more time, so moved the buy up to $21.66

These guys also make the Call of Duty series - another blockbuster franchise with release coming up for the holidays

[Trampis]

I'm baffled by earnings releases. If you state that you've made 50% more money this Quarter over the last but everybody thought you were going to make 55% more money then your stock price goes down 5-10%.

It seems like the only time to own a stock through earnings is if everyone thinks that it is going to do bad ...but it doesnt quite do as bad as everyone thinks..then it goes up! Weird

I had a stock recently that matched analysts expectations and it dropped 15%...good company,second quarter in row turning a profit, good guidance on how they were going to lower costs significantly..its down 30% now,1/2 its 52 week high.

[KC Scott]

Trampis - they explain it as already being priced into the stock - so unless it's a real blowout and they guide significantly higher, it doesn't gap up.

Also, the whole market is scared right now - Oil at a record high, recession fears and possible war with Iran -

Regarding ATVI I reset my buy point down to the 200 DMA at 19.95 - based on trend that's where this one is headed, if only for a short while.

[KC Scott]

Bought 500 shares of AVTI today @ 19.50 ea

Knee jerk reaction to Gamestop revising their Q4 forecast downward putting pressure on all the gamemakers.

The funny thing of course is that GH3 was one of their top 3 selling games for the quarter (along with Halo3 and Madden '08)

Really like everything about this company - it's a buy and hold with a target sell price around $30 - for now

[KC Scott]

One theory of how the markets work is a stocks price is an acurate reflection of it's worth at that precise moment ........... Duh!

So when earnings calls are made tha analysts have already forecasted what the company will make and that, theoretically has already been priced in.

What I've seen moves stocks is beating the analysts expectations, significantly and, in addition, forecasting higher than expected growth the next.

What I look for are companies that obviously are hot with their product or service, but tend to be conservative in their estimates.

Activision is a great case in point. They forecasted moderate growth for Q4 - and this with Target and Best Buy selling GH3 faster than they can keep it on the shelves. So all the analysts heard was 8-10% growth in Q4 and if the funds and institutionals aren't buying then the stock goes down.

This buy scared me a bit today, beacuse it dipped below it's 200 DMA ($19.47) - but since it closed above - it should be OK. the three year trend line for ATVI is in tact also.

[KC Scott]

Nice jump this week in ATVI


Activision, Inc. (Nasdaq:ATVI) is raising its net revenue and earnings per diluted share outlook for the fiscal third quarter ending December 31 2007 and for fiscal year 2008. Robert Kotick, Chairman and CEO, Activision, Inc., said, "We are confident that the third quarter of fiscal 2008 will be the largest and most profitable quarter ever. Guitar Hero III: Legends of Rock and our newly released Call of Duty 4(TM): Modern Warfare(TM) already are two of the biggest entertainment titles this year. Due to the strong consumer response to our slate through October and strong retail sales over the Thanksgiving weekend, we are raising our financial outlook for the December quarter and the fiscal year." You can read the entire press release here.

Company Profile: Activision, Inc. engages in the development, publishing, and distribution of interactive entertainment software and peripheral products. It offers a portfolio of products that spans various categories and markets, and is used on various game hardware platforms and operating systems. It offers its products primarily in versions that operate on the Sony PlayStation 2, Sony PlayStation 3, Nintendo Wii, Microsoft Xbox 360 console systems, Nintendo Game Boy Advance, Sony PlayStation Portable, and Nintendo Dual Screen hand-held devices, and personal computers.

Activision, Inc. was founded in 1979 and is based in Santa Monica, California.

Fundamental Analysis: The following reports are as of September 30th 2007 results.

Financial health:

* Current Ratio = Current Assets/Current Liabilities = 3.54
* Total Liabilities/EBITDA Ratio = 1.25
* Total Liabilities/Operating Cashflow = -9.5

The main item that stands out in Activision's financial status is that its Operating cashflow was negative in the past 12 months. Hence you see a negative ratio for TL/OCF. But OCF has turned positive as of 3/31/2007 quarter result. If the revenues continue to increase going forward, then this negative OCF may not matter much.

Profitability:

* TTM Sales growth: 28.9%
* Last year Sales growth: 3.07%
* Latest Qtr over year ago Quarter sales growth: 68.9%

* TTM Operating Margin improvement: 74.54%
* TTM Return on Asset: 8%

* Last 2 year Gross Margin: 35.6%
* TTM Gross Margin: 36.8%

* Last 2 years Net Margin: 4.2%
* TTM Net Margin: 8%

Sales growth is soaring consistently in the past 12 months, particularly last quarter ending in September 2007. And look at the improvement in Operating Margin by 74%! Operating efficiency is improving, as seen by operating margin improvement and Net margin improvement. Notice that ROA is very good.

Analysts Rating:

* Strong Buys: 9
* Buys: 6
* Hold: 8
* Sell: 0

All eyes are set on ATVI. Many analysts including Jeff Macke have been bullish on Activision. Who would not care about gaming company stock during holiday season!

Weakness/Threats: Coming from Value Investing, the negative OCF in the past year tells me to be cautious about ATVI. But Activision has found a couple of hit games that can give them revenue boost during this holiday season.

Technical Analysis: The stock price has gapped upwards twice after Tuesday's announcement. But look for a good entry point before taking the plunge.


My Conclusion: It is true that Activision has found a couple of recent good hits, Guitar Hero III and Call of Duty 4. There are many other products that Activision caters to gaming markets that operate on PS2, PS3, XBOX 360 and Nintendo Wii. With all these gaming consoles being in favor, this holiday season should bring good cheer to the ATVI stock.

The stock has gapped up twice already, so I would be bullish on ATVI but with a good buy point though.

-Nidhi

[Trampis]

Congrats Scott! I saw the price droping to your buy point and then this weeks nice gain. Calling your shot at $30 per share might well happen after the results from the Christmas season are tallied.

[Trampis]

OK I just saw THIS! So,if I understand things correctly,the PPS will appreciate to $27.50 if it doesnt open there tomorow????
Lets see 27.50/19.50 =41% gain???

Vivendi to Buy Major Activision Stake
Sunday December 2, 8:21 pm ET
By Keith St. Clair, Associated Press Writer
Game Makers Vivendi Games, Activision to Combine in Deal That Gives Vivendi Controlling Stake


LOS ANGELES (AP) -- Vivendi SA said Sunday that it plans to acquire a controlling stake in Activision Inc. and combine the company with Vivendi Games in a deal that would create a rival to Electronic Arts Inc. as the world's largest video game publisher.


The combination of Santa Monica-based Activision, whose titles include "Guitar Hero," "Call of Duty" and the "Tony Hawk" series, and Vivendi Games, which publishes "Crash Bandicoot" and owns the online role-playing franchise "World of Warcraft," would create the world's largest pure-play online and console game publisher, the companies said.

Vivendi Games will convert its equity into Activision shares valued at $8.1 billion, and Vivendi will buy an additional $1.7 billion of stock, for a total of $9.8 billion, giving Vivendi a 52 percent stake in a new company to be called Activision Blizzard. On that basis, Activision and Vivendi valued the combined company at $18.9 billion.

"This transaction has always stuck out as the way to become the number one most successful video-game publisher," Activision Chief Executive Bobby Kotick said in an interview.

Vivendi's Irvine, Calif.-based Blizzard Entertainment is behind the top multiplayer online role-playing game franchise, "World of Warcraft," which the company says more than 9.3 million subscribers worldwide. Blizzard's Warcraft and Diablo series are two of the top-selling video game lines of all time.

Jean-Bernard Levy, chairman and chief executive officer of Vivendi, pledged the deal "will unlock the value of Blizzard."

Said Jeff Brown, spokesman for Electronic Arts: "We wish them luck. We look forward to the competition and believe that EA still has the strongest portfolio of perennial game franchises."

Kotick, who will stay on as president and CEO of the new company, said the deal had been in negotiations since January.

Under the agreement, shares of Vivendi Games will be converted into 295.3 million new shares of Activision common stock at a price of $27.50 per share, for a value of $8.1 billion, the companies said in a statement.

Vivendi, based in Paris, France, also will purchase 62.9 million newly issued shares of Activision common stock at a price of $27.50 per share, or $1.7 billion, giving Vivendi its 52 percent stake.

Activision Blizzard will continue to operate as a public company traded on the Nasdaq Stock Market under the ticker ATVI.

After the transaction closes, expected in the first half of 2008, Activision Blizzard will launch a $4 billion all-cash tender offer to purchase up to 146.5 million Activision Blizzard common shares at $27.50 each. Vivendi also has agreed to acquire an additional $700 million of newly issued Activision shares, giving Vivendi about a 68 percent stake in Activision Blizzard if the tender offer is fully subscribed.

The offer price is a 24 percent premium to Activision's closing price Friday of $22.15 per share.

Activision Blizzard's board of directors will be comprised of six directors designated by Vivendi, two Activision management directors and three independent directors who currently serve on Activision's board of directors.

Vivendi Games CEO Bruce Hack will serve as vice chairman and chief corporate officer of Activision Blizzard.

The merger will provide Activision Blizzard with the most diversified and broadest portfolio of interactive entertainment assets in the industry, according to the statement.

The companies said the transaction would be accretive to earnings for both companies' shareholders in the first year after the deal closes. The combined company is targeting pro forma operating income of $1.1 billion and pro forma earnings per share of more than $1.20 in calendar year 2009.

[KC Scott]

It's a good news / bad news scenario for ATVI stockholders right now- Good news is Vivendi is offering $27.50 in April - the bad news is it's offering $27.50 in April. So no matter how huge the results of Xmas are, there's an artificial "cap" on the share price at least in the eyes of most investors.

Now 83% of the shares are owned by institutions so to gain the shares Vivendi wants, they may have to up that tender. That could lead to a higher price. A much better scenario would be Electronic Arts or an another unwanted suitor making a play and igniting a bidding war. Unlikely..... but could happen.

Long term- I'm excited about the Vivedi merge. I'm not an online geek - but I guess there's over 9 million of them dishing out $30 per month to play Warcraft.
That's a real nice business model. Asia seems to have huge potential according to what I read today.

The makers of Grand Theft Auto TTWO jumped today also. Lot of speculation that there's going to be more consolidation in the game industry

[KC Scott]

Activision Shares Hit Record High
Thursday December 20, 3:13 pm ET
Activision Shares Hit All-Time High As Video-Game Software Company Raises Outlook Again


NEW YORK (AP) -- Activision Inc.'s shares hit an all-time high Thursday, after the video-game software publisher raised its third-quarter outlook for the second time in less than a month on healthy holiday sales.
ADVERTISEMENT


The stock has been trading at record levels in recent weeks, fueled by Vivendi SA's decision to buy a majority stake in the company and combine it with its games division. The new company would be called Activision Blizzard and own not only the blockbuster "Guitar Hero" franchise but also "World of Warcraft," the world's most popular multiplayer online game.

On Wednesday, Activision raised its guidance for the current quarter as well as for the full fiscal year, which ends in March. This was the second outlook boost in less than a month -- the company had already raised its expectations in November. Strong sales of "Guitar Hero III" and "Call of Duty IV" are fueling Activision's sales during the crucial holiday season.

The company is benefiting from the popularity of video games around the holidays with a strong product lineup. Rival Take-Two Interactive Software Inc., meanwhile, recently posted a quarterly loss because it has had to delay the latest installment of the lucrative "Grand Theft Auto" series until next year.

Evan Wilson, an analyst with Pacific Crest Securities, said the "Guitar Hero" and "Call of Duty" franchises continue to perform above expectations. But, he added, investor focus remains on Activision Blizzard, which is set to create "the premier company in the industry, which we continue to believe will translate to the best investment in coming years."

Activision now expects a third-quarter profit of 76 cents per share on revenue of $1.38 billion. Excluding stock options costs, the company forecast earnings of 80 cents per share. This is well above Wall Street's expectations of a profit of 69 cents per share, excluding stock options expenses, on revenue of 1.21 billion.

The company's updated outlook includes costs from the Vivendi acquisition, which Wilson estimated to be about 2 cents per share in the third quarter.

Santa Monica, Calif.-based Activision's shares rose $1.03, or 3.8 percent, to $27.83. Earlier, the stock hit $27.98, its highest level ever. The shares have gained 59 percent in the past 52 weeks.

So I guess this throws the $27.50 cap right out the window - My take now is Vivendi will have to raise their tender offer in order to get the shares needed
I'm still hoping it goes through - the combined strength of these two companies would be tremendous with the titles they have

[KC Scott]

Quick update - ATVI retraced back today off the recent high, not unexpected given the run-up of 40% since Nov.
I think it might dip back to 26-27 as a shake out of those still thinking it's locked at 27.50 merge price.

As it has just set a new all time high, I'm giving this plenty of room to run.

[Trampis]

Did you ever take profit Scott? I see it nudged up against 30 at the end of December,retraced on the volatile market of the past week or so and might be poised to test 30 again if th emarkets can be stable enough.

[KC Scott]

No - still holding ATVI.

It's basing again at $27.50 and wedges like that almost always break towards the prevailing trend - in this case upwards.
The volume accumulation at & above $26.50 after the Blizzard announcement means there is some substantial upside
I also like the possibility of a squeeze as it gets closer to earnings -