We all talk about the fundamentals behind an investment idea, but sometimes you have to pay more attention to the observed price action. That's what I was thinking today while checking out Activision Blizzard (ATVI).

I have been watching this publisher of entertainment software closely as of late, wondering if it was time for me to get back in. Compared to other similar companies such as Electronic Arts (ERTS) and Take-Two Interactive (TTWO), I think Activision Blizzard offers the best potential for both the console market and online gaming.

Continue reading Activision Blizzard's Interesting Price Action

Activision Blizzard's Interesting Price Action originally appeared on BloggingStocks on Thu, 15 Apr 2010 16:30:00 EST. Please see our terms for use of feeds.

Take-Two Interactive (TTWO) is the kind of stock I want to take a chance on but just can't bring myself to do so. The situation can be risky unless a fresh bit of Grand Theft Auto content is about to come out into the marketplace. Then again, those who bought ahead of the Q1 earnings report, released yesterday after the bell, are pretty overjoyed this afternoon, seeing that the stock is, at the time of this writing anyway, up well over 9%.

Net sales increased 9%. The adjusted loss from continuing operations was 31 cents per share. Last year at this time, shareholders were looking at a loss of 56 cents per share on the same basis. Reuters says the analyst call was for the red ink to equal 51 cents per share. Good job, management.

Continue reading Take-Two Trading Higher After Q1 Results: Is Stock a Buy?

Take-Two Trading Higher After Q1 Results: Is Stock a Buy? originally appeared on BloggingStocks on Thu, 04 Mar 2010 16:00:00 EST. Please see our terms for use of feeds.

How about Take-Two Interactive (TTWO)? That stock was down 30% in afternoon trading at the time of this writing. 30%! According to The Wall Street Journal (subscription required), management issued some poor guidance that has shaken the confidence of market players. Add to that the general state of the retail environment, and you've got yourself a decidedly awful combination.

Continue reading Take-Two is yet another victim of video game malaise

Take-Two is yet another victim of video game malaise originally appeared on BloggingStocks on Fri, 04 Dec 2009 15:40:00 EST. Please see our terms for use of feeds.

Fair or not, Take-Two Interactive (NASDAQ: TTWO) has a reputation for a shallow pipeline of shareholder-enhancing software. It is known simply as the Grand Theft Auto publisher. There's more to Take-Two, of course. There are sports titles, for example. There's BioShock. How about the big hit for the Nintendo (OTC: NTDOY) Wii, Carnival Games? What about Borderlands?

That's all well and good, but if you look at the company's latest earnings report, you'll have no choice but to conclude that the one-game reputation is firmly intact.

Take-Two's top line plummeted 68% during the fiscal third quarter. Net loss on an adjusted basis came to 66 cents per share. There was a huge profit of 93 cents per share in the year-ago period, driven by the fourth edition of Grand Theft Auto. Not a great comparison. At least the performance was a little better than expectations. According to Earnings.com, Wall Street was calling for a loss of around 68 cents per share.

Continue reading Take-Two Interactive reports Q3 loss

Take-Two Interactive reports Q3 loss originally appeared on BloggingStocks on Wed, 02 Sep 2009 08:00:00 EST. Please see our terms for use of feeds.

Oh, I am so depressed! I was thinking of buying Activision Blizzard (NASDAQ: ATVI) for an earnings trade, but unfortunately never got around to it. Those who did are pretty happy. The publisher released second-quarter results on Wednesday after the bell, and investors bid the stock over 10% higher today.

Adjusted revenues came in at a little over $800 million. Management's previous guidance called for $775 million to be booked. Adjusted earnings were 8 cents per share, 2 cents ahead of company expectations. According to Reuters, this was a penny better than what the actual analysts were forecasting.

Continue reading Investors love Activision Blizzard's Q2

Investors love Activision Blizzard's Q2 originally appeared on BloggingStocks on Thu, 06 Aug 2009 17:40:00 EST. Please see our terms for use of feeds.

Activision Blizzard (NASDAQ: ATVI), a video-game publisher that competes with Electronic Arts (NASDAQ: ERTS), THQ (NASDAQ: THQI), and Take-Two Interactive (NASDAQ: TTWO), reported some cool first-quarter numbers on Thursday after the bell. On an adjusted basis, the company earned 8 cents per share. According to analysts, Activision Blizzard was only supposed to do around 5 cents per share.

Not only was the bottom line solid, but revenues on an adjusted basis also came in ahead of expectations. And you can thank the usual suspects for powering up the quarter. You've got Call of Duty. You've got Guitar Hero. You've got World of Warcraft. These best-of-breed franchises are selling a lot of copies on Sony's (NYSE: SNE) PlayStation 3, Microsoft's (NASDAQ: MSFT) Xbox 360, and Nintendo's (OTC: NTDOY) Wii.

Continue reading Activision Blizzard beats in Q1 -- is it still a strong investment idea?

Activision Blizzard beats in Q1 -- is it still a strong investment idea? originally appeared on BloggingStocks on Fri, 08 May 2009 09:00:00 EST. Please see our terms for use of feeds.

Take-Two Interactive (NASDAQ: TTWO), a video-game company that competes with Activision Blizzard (NASDAQ: ATVI), Electronic Arts (NASDAQ: ERTS), and THQ (NASDAQ: THQI), delivered some good news in its first-quarter report. The company reported a loss of $0.52 per share on an adjusted basis. I know, a loss is a loss and is never a good thing, but at least it was better than analyst expectations. According to this source, Wall Street was figuring on a loss of $0.73 per share.

Continue reading Take-Two beats estimates in Q1, but is this the best video-game stock?

Take-Two beats estimates in Q1, but is this the best video-game stock? originally appeared on BloggingStocks on Tue, 10 Mar 2009 18:20:00 EST. Please see our terms for use of feeds.

Activision Blizzard (NASDAQ: ATVI), a video-game publisher that competes with Electronic Arts (NASDAQ: ERTS), THQ (NASDAQ: THQI), and Take-Two Interactive (NASDAQ: TTWO), reported earnings for the fourth quarter on Wednesday after the bell. The company did well during the holiday-selling season, in my opinion. According to this source, adjusted quarterly earnings of 31 cents per share beat estimates by two pennies. Non-GAAP sales of $2.3 billion also beat analyst expectations.

However, the market decided to sell the stock in the after-hours session after the earnings were released because of what was perceived to be a poor outlook for the next fiscal year (as I was writing this piece, the shares were off by about 4%). Analysts were hoping that 2009 would bring 67 cents per share on an adjusted basis, but Activision Blizzard's management team thinks 61 cents per share is more likely.

Continue reading Activision Blizzard beats during holiday quarter, where does stock go from here?

Activision Blizzard beats during holiday quarter, where does stock go from here? originally appeared on BloggingStocks on Thu, 12 Feb 2009 08:30:00 EST. Please see our terms for use of feeds.

Continue reading Electronic Arts crashed in Q3: Is it really a value?

Electronic Arts crashed in Q3: Is it really a value? originally appeared on BloggingStocks on Wed, 04 Feb 2009 10:55:00 EST. Please see our terms for use of feeds.

Take-Two Interactive (NASDAQ: TTWO), a video-game company that competes with Activision Blizzard (NASDAQ: ATVI) and Electronic Arts (NASDAQ: ERTS), hit a 52-week low on Monday. When I saw that the stock hit this level, I immediately began thinking about buying it. But, I must admit, it seems a little scary to be buying in now.

The reason I'm hesitant is that the magic of Grand Theft Auto IV has essentially come and gone. You know how it's fun and inspiring to buy Marvel (NYSE: MVL) ahead of some big movie releases? Trades like that don't always work out, but at least you feel a little more confident about owning the stock.

Then there's the recent earnings report from Take-Two. The publisher disappointed investors, as Zac Bissonnette observed. The numbers weren't great, and you have to wonder how much interest the institutions on Wall Street will have in a company that not only might be susceptible to the slowdown in consumer spending, but which has already used up its major ace.

Continue reading Is Take-Two Interactive a buy?

Is Take-Two Interactive a buy? originally appeared on BloggingStocks on Tue, 30 Dec 2008 13:45:00 EST. Please see our terms for use of feeds.

Take-Two Interactive disappoints investors originally appeared on BloggingStocks on Thu, 18 Dec 2008 09:09:00 EST. Please see our terms for use of feeds.

Microsoft (NASDAQ: MSFT) is in mortal competition with Sony (NYSE: SNE). The Xbox 360 wants to destroy the PlayStation 3. Of course, both would like to take out the Nintendo (OTC: NTDOY) Wii, but that's a pipe dream at this point. Microsoft mainly wants to claim victory over Sony because the systems of those two companies are more comparable to each other than they are to the Wii. And it looks like the most recent Black Friday may have been a win for Microsoft.

According to this source, the Xbox 360 outsold the PlayStation 3 by a margin of three-to-one. Also, Microsoft increased its console sales on Black Friday by 25% on a year-over-year basis. This data comes from Microsoft itself. Assuming it is close to accurate, Sony continues to find itself in a terrible position. Really, this current console cycle has been difficult for the PlayStation franchise. But while Microsoft won bragging rights, I can't help but wonder if the real winner from this increase in Xbox 360's installed user base is actually Activision Blizzard (NASDAQ: ATVI). It's currently my favorite publisher, and I own it in my portfolio. And given that the article I cited mentions the fact that the Xbox 360 enjoys a healthy game attach rate (the game attach rate is an indicator of how many software titles are purchased per console for a particular system), I figure that a lot of the new Xbox 360 owners will be attaching titles such as Call of Duty and Guitar Hero to their systems. These two brands play very well on the powerful console, and they are must-own games for a lot of users.

Admittedly, I'm sure other publishers will benefit from all the new Xbox 360 owners. Electronic Arts (NASDAQ: ERTS), THQ (NASDAQ: THQI), and Take-Two Interactive (NASDAQ: TTWO) are all obviously happy over Microsoft's Black Friday performance. But I believe Activision Blizzard to be the best positioned of the group. Its portfolio should rock over the holidays, and I think the company will take full advantage of all the console sales from now until the new year.

Disclosure: I own Activision Blizzard; positions can change at any time.

Microsoft beats Sony on Black Friday (real winner: Activision Blizzard) originally appeared on BloggingStocks on Wed, 03 Dec 2008 11:15:00 EST. Please see our terms for use of feeds.

I was a little surprised when I heard that the deal between Electronic Arts (NASDAQ: ERTS) and Take-Two Interactive (NASDAQ: TTWO) was called off. Yes, I had my doubts, but I thought that in the end, EA might raise its offer so that it could get its corporate paws on the Grand Theft Auto franchise. EA has been looking for ways to grow in a world where Activision Blizzard (NASDAQ: ATVI) is making waves with Guitar Hero and World of Warcraft. That company's stock has done well over the past year, while EA's has suffered.

EA may be walking away for now, but I'm not sure this is the last that we'll be hearing of Take-Two being in arbitrage play. Management clearly wants to sell the publisher. Thing is, it should have simply taken the offer it received earlier in the year. Now, shareholders will have to wait for another bid. Who knows when that will be, considering that it's been reported that software sales may be heading for a slowdown (I'm sure EA must have taken this into consideration when leaving the table).

But what does this mean for video-game investors? I believe investors should put Take-Two on a watch list and pray for the publisher's shares to drift down toward the 52-week low. I would not take a chance on the stock at these levels. Ideally, I would love to see Take-Two trading below $10 per share before buying. Right now the 52-week low is $13.53. Getting to single digits might be wishful thinking, but you never know the way this market is behaving. And considering that management passed up what was most likely a decent offer in the first place, one has to wonder if Wall Street might be in a punishing mood.

No matter what, Take-Two will be bought out. And if one could get in at a very low price, then the speculative risk/reward scenario might be attractive. EA might come back at some point, too. In fact, I expect the company to, although that is purely my own educated guess. I continue to own ATVI as my video-game play, but will be keeping my eye on Take-Two and its price action.

Disclosure: I own Activision Blizzard; positions can change at any time.

Take-Two should have taken EA's offer originally appeared on BloggingStocks on Tue, 16 Sep 2008 10:43:00 EST. Please see our terms for use of feeds.

Take-Two Interactive (NASDAQ: TTWO) is riding high on its Grand Theft Auto IV title. The popular game (big understatement) helped push the top-line during the third quarter to a better than 100% gain, coming in at $433 million. As for the bottom line, forget about it -- that was blown out of the water. On an adjusted basis, net income was 93 cents per share versus a loss of $0.62 in the year-ago period.

According to Briefing.com, this simply was far more than any analyst anticipated. The bottom line bested estimates by 39 cents! Most shareholders probably anticipated Take-Two going beyond Wall Street's expectations, but I'm not sure they thought that the publisher could pull such an order of magnitude off. Nevertheless, management believes that next quarter might not be as hot as first anticipated due to some timing issues. So they guided lower for Q4. This might explain, in part, the lack of excitement surrounding the stock at the close of the after-hours session on Thursday. The stock ended up with a 0.5% gain in price.

However, all is not lost. While Take-Two thinks Q4 might not be the best thing since sliced bread, it is confident that it will be able to go beyond the original outlook for the fiscal year. Take-Two says it will deliver between $2.08 and $2.12 in adjusted earnings per share for the year. Wall Street was counting on $1.81 per share for the fiscal year. With the stock trading around the $23 mark, this would imply that the shares could be cheap.

Continue reading Take-Two takes analysts for a ride

Take-Two takes analysts for a ride originally appeared on BloggingStocks on Fri, 05 Sep 2008 09:00:00 EST. Please see our terms for use of feeds.

Take-Two and Electronic Arts sign confidentiality agreement, but I'm still skeptical originally appeared on BloggingStocks on Tue, 26 Aug 2008 14:35:00 EST. Please see our terms for use of feeds.

Can you believe the drama going on between Electronic Arts (NASDAQ: ERTS) and Take-Two Interactive (NASDAQ: TTWO) has dragged on for this long? I can't. According to this article, EA has let its current bid expire and intends on checking out additional stats behind the company in an effort to think more about what Take-Two has to offer and what its true value might be. The company behind the Grand Theft Auto series of mature-rated games is offering to give EA a presentation that includes non-public data.

EA really wants this deal. So does Take-Two. EA believes that it needs a super-franchise that goes beyond its sports dominance, and it feels that Grand Theft Auto would be one heck of an asset to own. It's true. EA would probably benefit from the title, and it might get the company's stock out of its current doldrums. And in a world where Activision Blizzard (NASDAQ: ATVI) is benefiting greatly from an acquisition and a merger -- Guitar Hero and Vivendi Games, respectively -- one cannot blame EA, I suppose, for keeping the dream alive.

EA is in something of a bad spot because, at this point, it probably will have to raise the bid on Take-Two. I think the market will ultimately be disappointed if EA doesn't get Grand Theft Auto (and BioShock, for that matter). It will be perceived as a failure on management's part, and shareholders will wonder where the growth will be coming from, and what catalysts can be counted on to drive the stock price higher in this tough economic environment.

Continue reading Will Electronic Arts ever take Take-Two?

Will Electronic Arts ever take Take-Two? originally appeared on BloggingStocks on Tue, 19 Aug 2008 08:20:00 EST. Please see our terms for use of feeds.

Activision Blizzard Inc. (NASDAQ: ATVID) reported preliminary Q1 earnings earlier in the week, and from a shareholder's perspective, they were great. These results are for Activision itself, and do not take into account the effect of the merger with Vivendi Games.

OK, consider the following. Management had previously thought that Q1 would see revenues of about $500 million. The game publisher should actually deliver around $650 million on the top line. And in terms of earnings per diluted share, Activision should do at least $0.16. Previously, the call was for $0.04 per diluted share. Activision obliterated its own projections, and one has to wonder when the momentum is going to stop.

I hope it never does, of course, since I own shares of the company. Competitors such as Electronic Arts (NASDAQ: ERTS) and THQ (NASDAQ: THQI) are doing everything they can to keep up. Their stocks certainly aren't near 52-week highs, and in the case of EA, a takeover of Take-Two Interactive (NASDAQ: TTWO) seems to be the biggest priority in terms of counteracting the Activision Blizzard juggernaut. Now, in terms of drivers for the quarter, Activision benefited from Guitar Hero and, believe it or not, a game based on DreamWorks Animation's (NYSE: DWA) Kung Fu Panda. In fact, the Panda title was mentioned first in terms of drivers. This shows that, even though Activision has some awesome intellectual properties of its own, it still knows how to derive value from investments in licensed properties.

Continue reading Activision scores during Q1 thanks in part to 'Kung Fu Panda'

Activision scores during Q1 thanks in part to 'Kung Fu Panda' originally appeared on BloggingStocks on Wed, 16 Jul 2008 11:23:00 EST. Please see our terms for use of feeds.

Activision closed on its transaction with Vivendi Games Thursday and officially became Activision Blizzard (NASDAQ: ATVID), according to an article at SmartMoney.com. And I am pretty excited at the prospects for the new business (I am a shareholder). It's going to be a tough competitor against Electronic Arts (NASDAQ: ERTS) and Take-Two Interactive (NASDAQ: TTWO). (Of course, the latter two might merge at some point.)

Activision is riding high with its Guitar Hero franchise, and Vivendi Games brings an incredible asset to the table in the form of online gaming sensation World of Warcraft. I can't say I know much about World of Warcraft the game itself, but I know it has a huge following. What else do I need to know, right? For 2009, management at Activision Blizzard expects pro-forma operating income of over $1 billion and perhaps $1.20 or more in terms of earnings per share. That puts the stock, which rose over 5% on Thursday and closed with a price of $31.77 per share, with a P/E ratio a little over 26. That isn't too bad a valuation considering the growth potential. And when the holiday season comes around, I'm sure people will still be buying the publisher's software for gifts, recession or not. Whether it's the Sony (NYSE: SNE) PlayStation 3, the Microsoft (NASDAQ: MSFT) Xbox 360, or the Nintendo (OTC: NTDOY) Wii, gamers will be buying the company's products for these platforms in droves.

The stock has retreated from the highs it reached back in June when I wrote about it, but I am still bullish on the thesis here. Activision Blizzard should do really well, but with the markets in turmoil, you can probably wait for a pullback before buying.

Disclosure: I own Activision Blizzard; positions can change at any time.

Activision Blizzard set to rock the market originally appeared on BloggingStocks on Fri, 11 Jul 2008 14:24:00 EST. Please see our terms for use of feeds.

Take-Two Interactive's (NASDAQ: TTWO) Grand Theft Auto IV game stole the number-one position on the software sales chart for May, according to data from market research firm NPD. It sold over 1.3 million copies last month, and it has moved over 4 million since it hit the street. I figured Take-Two would be taking the top slot here, but the big question on my mind pertained to how Nintendo's (OTC: NTDOY) Wii system would do in May. After all, the fad has to wear out at some point, right? At some magical juncture, either Sony's (NYSE: SNE) PlayStation 3 or Microsoft's (NASDAQ: MSFT) Xbox 360 will displace the Wii and become the top-selling system of the month.

Well, that hasn't happened yet. The Wii sold the most, moving 675,000 systems. That was more than three times the amount of consoles sold by PlayStation 3. And as for the Xbox 360, that came in dead last, moving only 187,000 units. All told, total video-game sales, including hardware and games, increased 37% year-over-year. Yep, video games are still hot.

I'm going to predict that the Wii Fit will be the top-selling game package for the month of June. This thing is flying off the shelves in my area, even at $90 (apparently, high fuel costs aren't hurting Nintendo's clientele). Does that mean that Nintendo might make for a good short-term trade? Maybe, but I'd prefer buying it safely below $60 per share. As of this writing, it's trading well above $60 per share. I continue to hold Activision (NASDAQ: ATVI) as my play on video games, and will be keeping Electronic Arts (NASDAQ: ERTS) in the back of my mind as August approaches, since that will be when the new Madden game arrives in stores. Not sure if that's worthy of a trade yet.

Disclosure: I own Activision; positions can change at any time.

May was another merry month for the video-game industry originally appeared on BloggingStocks on Fri, 13 Jun 2008 12:08:00 EST. Please see our terms for use of feeds.

Was it any surprise that Take-Two Interactive Software, Inc. (NASDAQ: TTWO) beat expectations for the second quarter? Not a chance. That's because Grand Theft Auto IV stole a lot of hardcore-gamer hearts when it made its eagerly anticipated debut back in April. Net revenues more than doubled to nearly $540 million in Q2, and adjusted net income came in at $1.52 per share. Briefing.com says that the bottom-line results were $0.39 ahead of analyst expectations. Again, we saw this coming.

Take-Two opened Grand Theft Auto IV on the Sony Corporation (NYSE: SNE) PlayStation 3 and Microsoft Corporation (NASDAQ: MSFT) Xbox 360 platforms with excellent fanfare and brilliant marketing, taking full advantage of the brand equity intrinsic to the title. An impressive 8.5 million discs of the title have been sold so far. Job well done. Plus, BioShock is coming to PlayStation 3 later this year. That's going to be a major franchise in the years to come.

Yet, I will not buy the stock. With the arbitrage battle surrounding Take-Two and its takeover dance with Electronic Arts (NASDAQ: ERTS), I simply am discouraged from stepping in and adding the company to my portfolio. I owned Take-Two at one time, but I'm not interested in getting back in. Besides, the news is out on Grand Theft Auto, so who knows if this would have been much of a trade right now, even if the EA deal wasn't on the table. Great quarter, excellent future guidance, but I just don't see the value of playing the buyout-game here.

Disclosure: I don't own any of these companies, but positions can change at any time.

Take-Two demolishes expectations in Q2 -- I'm still not a buyer originally appeared on BloggingStocks on Thu, 05 Jun 2008 18:00:00 EST. Please see our terms for use of feeds.