Analyst predicts big money for Activision's financial report

The following information comes from Analyst Cowen and Company…

- raised its expectations of Activision-Blizzard
- expected revenues from $4.58 billion to $4.77 billion
- “We expect strong sales of Call of Duty: Black Ops and World of Warcraft: Cataclysm to drive a blowout quarter.”
- financial year estimate increases slightly to $4890 million (from $4804 million)
- “multi-year pipeline as quite robust”
- “We believe that despite some challenges, Activision can grow earnings in FY11, based on continued growth from the Call of Duty franchise and likely new output from Blizzard.”
- “modest” contributions from other Activision
- “We do not assume any significantly improved performance from the rest of the company’s game portfolio.”
- “Guitar Hero: Warriors of Rock and DJ Hero 2 failed to sell 1 million US units combined in 2010, with total unit sales 63% below that of Guitar Hero 5/DJ Hero/Band Hero in 2009.”
- this failure shouldn’t have too much impact
- more growth from the Call of Duty franchise in 2011 due to an expanding console hardware install base
- ongoing decline in the franchise’s tie ratio
- DLC sales would likely grow
- Activision-Blizzard “shares can outperform the market by at least 20% over the next 12 months.”
- Call of Duty franchise extension could “debut with at least 5 million in worldwide unit sales” but expected to be delayed until as far as 2013

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