Activison Blizzard Misses Q4 Sales Estimates, Announces Layoffs

Shares of "Call of Duty" maker Activision Blizzard Inc. ATVI ticked higher in after-hours trading despite a soft outlook for coming-year sales as it announced staff reductions.

The company's earnings report was mixed, hitting estimates of $1.29 per share for the fourth quarter but missing revenue expectations, reporting sales of $2.38 billion below estimates of $3.04 billion. It projected full-year 2019 guidance of $2.10 per share on $6.3 billion in revenue, well below analyst estimates.

Company officials said on a conference call that Activision won't improve in-game monetization as much as it would like and that it would have a net headcount reduction of 8 percent of its workforce across business units.

There was good news -- the company reported that the "Call of Duty" franchise remains the top console franchise worldwide, after a huge release in October for the "Call of Duty: Black Ops 4" game.

Other Highlights

• Activision had 53 million Monthly Active Users in the quarter, growing double-digits quarter-over-quarter.
• Fourth-quarter segment revenues grew 6 percent year-over-year to $1.41 billion.
• Operating income increased 14 percent year-over-year to $723 million.

CEO Bobby Kotick said the company will increase development investment in its biggest franchises, and that the number of developers working on "Call of Duty," "Candy Crush," "Overwatch," "Warcraft," "Hearthstone," and "Diablo" would increase about 20 percent.

In January, Activision took a hit when game developer Bungie announced it was ending its contract to create games for Activision, and kept the rights to the "Destiny" game franchise. The company's stock dropped 10 percent at the time.

Its share price drop nearly 10 percent again last week as the broader gaming industry lost share value because of disappointing earnings reports from the company’s top two competitors, Take-Two Interactive Software Inc. TTWO and Electronic Arts Inc. EA.

In all, shares of Activision have fallen nearly 50 percent since hitting a high of just under $85 a share in early October.

Activision shares were up about 2 percent in after-hours trading to $42.50. The stock closed higher by 3.8 percent in the regular session.

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"Call of Duty: Black Ops 4" screenshot courtesy of Activision Blizzard.