Wednesday, January 5, 2011

Stock Comment : Activision Blizzard (ATVI)- Hell, yeah!

There must not be a guy reading this who does not know Starcraft, WoW, Diablo, Warcraft RTS - All games produced by Blizzard which merged with Activision a few years ago. Activision are equally as famous for games such as Guitar Hero and Call of Duty (CoD).

So, it must be pretty natural for any guy to buy stocks of their favourite game maker, right? - ATVI (Activision Blizzard)

But sentiment alone is not enough! Let us have the numbers.

2.8 billion is cash! No debt! The business has generate 1.1 billion in free cashflow in 2009! That shows a fundamentally strong stock.

It has recently bought back a billion of its shares in 2009 and paid out a dividends of 1.4%. With that much money around, it has a few options: Pay a dividend, buy up its own shares, acquire a new company or plough it back into other products/R&D.

The upside? It has Diablo 3 coming out (fingers crossed!). Recently the latest COD Black Ops broke record sales - And they are planning to release COD 4 this year. They have 2 more campaigns of Starcraft 2 to milk (Zerg and Protoss Campaign). Millions are still hooked to World of Warcraft (WoW) and many more possibly after the latest expansion - Cataclysm.

Also, ATVI is able to produce digital goods to sell like hot cakes - ie: Creating limited edition in game steeds for their WoW characters and subscribers are willing to pay more for them!

There is plenty to look forward to!

The downside? 1) Mobile gaming has turned the idea of gaming upside down. Can people actually afford the time to play 'serious games'.

2)Games like WoW can't go on forever! It's so time consuming and most MMORPG eventually die off. Guitar Hero has grown kinda stale?

3)The market does not seem to love ATVI at the moment or at the Gaming market at the moment. In fact, ATVI has been trading in the USD 10-13 range the past year!

4) It has a rep of coming out with its game late! (10 years+ for SC2!)

My take?But as the economy takes off and with more titles coming out, there must be more growth ahead for this fundamentally sound company! It will take sometime for the market to realise this but one can hope it will be one ride up.

This is one stock many of us young Malaysians can relate to (ie: within our circle of competency)
and try to make money from!

Full Disclosure : Yes, Joe does owns shares in Activision Blizzard.

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