Fair Value Up for Activision, Shares Fairly Valued

GAAP revenue for the quarter improved 19% year over year to $1,726 million (versus guidance of $1,550 million) due to strong performance at Blizzard. Console GAAP revenue fell 20% year over year to $615 million, as the latest Call of Duty game, Infinite Warfare, continues to underperform versus the 2015 installment, Black Ops III. Management expects Activision to rebound in the second half of 2017 with the launches of Destiny 2 and the next Call of Duty game. PC GAAP revenue improved 42% to $566 million driven by Overwatch as Blizzard continues to diversify its revenue stream. Overwatch recently became the firm’s eighth $1 billion franchise less than a year since its launch. GAAP operating margin for the quarter fell to 29% from 32% last year as the firm was hurt by fewer higher-margin digital sales at Activision.

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