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Activision Blizzard offers a bleak warning for the future



The video game industry is turning to digital sales and Activation's reliance on traditional brick-and-mortar retailing could jeopardize the company's future, Activision ( ATVI ) said Thursday. The weakening euro and pound also hurt Activision's bottom line, and the company said the headwind will continue.

"The environment is still competitive," said Dennis Durkin, chief financial officer and president of Activison, during a conversation Thursday with Wall Street analysts. "We are seeing a wider range of outcomes for the second half of the year" in 2019, he added.

The company said it expects to get sales of just over $ 1

.1 billion this quarter, with non-GAAP earnings per share of $ 0.20. That's well below analysts' expectations of $ 1.4 billion and $ 40.

Activision had $ 1.7 billion in revenue a year ago, boosted by expansions in two of the hit video game franchises: "Destiny" and "World of Warcraft." Wall Street did not expect Activision's forecast to hit last year's figures, but it hoped for more than $ 1.1 billion.

The third-quarter estimate "sounds pretty conservative," said Michael Pachter, an analyst at Wedbush Securities. "They get pretty pissed." He expects the third quarter to be at least possible in turnover.

Despite the miserable outlook, Activision gave investors some reasons to be hopeful.

"Candy Crush Saga" and its many spinoffs propelled Activision Blizzard to a better-than-expected second quarter. Revenues exceeded Wall Street's expectations.

Candy Crush is still the largest app in the United States. King, the developer that makes Candy Crush and is owned by Activision, brought in $ 499 million in revenue during the second quarter.

"Candy Crush continues to crush it," said CEO Robert Kotick, during a conversation with investors Thursday. [19659011] Call of Duty World League Finals 2019 "data-src-mini =" // cdn.cnn.com/cnnnext/dam/assets/190808174217-call-of-duty-world-league-small-169.jpg " data-src-xsmall = "// cdn.cnn.com/cnnnext/dam/assets/190808174217-call-of-duty-world-league-medium-plus-169.jpg" data-src-small = "http: //cdn.cnn.com/cnnnext/dam/assets/190808174217-call-of-duty-world-league-large-169.jpg "data-src-medium =" // cdn.cnn.com/cnnnext/dam /assets/190808174217-call-of-duty-world-league-exlarge-169.jpg "data-src-large =" // cdn.cnn.com/cnnnext/dam/assets/190808174217-call-of-duty- world-league-super-169.jpg "data-src-full16x9 =" // cdn.cnn.com/cnnnext/dam/assets/190808174217-call-of-duty-world-league-full-169.jpg "data -src-mini1x1 = "// cdn.cnn.com/cnnnext/dam/assets/190808174217-call-of-duty-world-league-small-11.jpg" data-demand-load = "not-loaded" data -eq-pts = "mini: 0, xsmall: 221, small: 308, medium: 461, large: 781" src = "data: image / gif; base64, R0lGODlhEAAJAJEAAAAAAP /////// wAAACH5BAEAAAIALAAAAAAQAAkAAAIKlI + p5 " />

Activision's other popular titles also performed well. "Call of Duty: Black Ops 4" and "Hearthstone" increased sales, and the number of active users increased on both games. The company plans to continue expanding its well-used franchisees. The Overwatch League is set to host its grand final in Philadelphia next month, with a $ 1.7 million prize pool between the top two teams.

"We are still industry leaders in esports," Kotick said.

Overall, the company reported net income of $ 328 million in the second quarter, down 18.4% compared to last year.

Revenue was also in decline. Activision posted $ 1.4 billion in sales compared to $ 1.6 billion a year ago.

Coddy Johnson, Activision's president and CEO, blamed in part on the decline in sales on the loss of the Destiny franchise. Activision, which had partnered with developer Bungie to publish Destiny games, parted ways with Bungie in January this year, citing Destiny's failure to meet the publisher's financial goals.

In February, the company announced that it was laying off 8% of the workforce and restructuring the business to focus on the flagship game.
The stock rose 2.56% Friday. Earlier this week, video game stocks tumbled after Trump's comments Monday linked games to weapons weapons, but recovered Tuesday.

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