Alex,
Thanks for the consolation. MY consolation is that despite what the likes of Vic
and others say, ATVI at this level looks even more tempting from a takeover
point of view. At least it will bring companies to the table.
Sales of Q2 for the first week alone (actually 5 days) was 80,000
SALES (PC DATA). They shipped I think about 500,000-750,000 copies out. There was an article
in Multimedia Wire wondering how Q2 held up during the holidays. That
is the big question I think on everyone's mind. But that's where the
surprise comes in. I think as you think that Q2 did extremely well
with international distribution in Europe (minus Germany, but I'm sure they
got the game somehow) and Australia. If this is really the case, then
ATVI should come in with some big numbers and perhaps even surpass
estimates. Remember, ATVI is STILL selling Mercenaries, and some of the older games.
As a side note, I wonder if ATVI shipped Shanghai out the last day of the quarter
to beef up their 4th quarter and exceed estimates...I also wonder if we'll see
the results of the two distributor buyouts in this quarter. Probably not.
I agree with you about your wonder how a small company like Activision
can be downgraded when they've got one of the biggest PC games in
terms of sales for Christmas. Normally one big hit would push up
a company such as Activision.
All I can say is that Activision has no where to go but up from here.
As I knew previously and Vic pointed out in that link he posted,
console sales were huge this Christmas and it was a shame, well more than a shame,
that ATVI couldn't deliver the goods on Apocalypse for Christmas. Other
companies are
talking millions of copies of a single game sold. That's volume for you.
That's why ATVI has SO MUCH room to grow .
If they head into consoles in a big way this
year, they can dramatically boost earnings. They've got the cash to
do some major development and I'm sure we're going to see that plus a lot more
signing of third party developers. We've already got Apocalpyse (hopefully),
and Pitfall 3D.
That's how ATVI is going to sustain their
high rate of growth....probably 30% or more this year. That, and of course,
strong PC titles as well. We will see Heavy Gear 2 soon enough. Rumored to
have a brand new engine....not a beefed up MW2 engine. They will learn from
Dark Reign and their main competitor TA, to make a solid 2nd release as well.
Zork, the 2nd installment, will also appear this year. I'76 nitro pack SiN, etc.
And of course, being a publisher will also help sales, as it did GTIS.
But it isn't all bad that they didn't make Christmas with consoles (this isn't
simply rationalization, either), even though
Christmas is probably the best time for it...even more so than PC titles.
Think about it, people who buy PC games can afford them like you and me.
On the other hand, it's kids who play consoles (I know that this isn't
completely true....there are certainly a lot of young twenties who play the sports games,
etc.) Kids can't afford these games on their own, so they rely on their parents
to buy them. And what better time to ask than Christmas? But then every
kid has a BIRTHDAY, right?
Anyway, as you know, ATVI didn't miss consoles completely...Nightmare Creatures
(don't think it sold well)...Car and Driver (don't know sales)...
But like Blizzard/CUC said, there really isn't a need to hit Christmas if the
game is solid. Look at Diablo and then of course, StarCraft for early 98.
Be assured, Starcraft will SELL WELL.
Look also at Goldeneye for the N64. It did extremely well and it
came out in the early/middle of the year. If ATVI can put out some good games
in early 98, we may have a buffer against those huge losses we always see
in the 2nd quarter (due to returns,etc.).
Unlike Broderbund, which I think is a one trick pony (other people may
argue with me on this one) but the fact of the matter is not much of their
other stuff is selling very well, although Red Orb seems to have a couple
of neat titles coming up), ATVI is a well-diversified company with lots of room to grow.
A lot of good titles with lots of brand awareness. They've stumbled in the
product releases for some of their games, most notable Heavy Gear (still
a great game) and are showing signs of strain from growing too rapidly.
But a lesson is a lesson and I have faith in Bobby Kotick that he
won't let this thing happen again. As a note, in that whole Heavy Gear
thing, I saw him referred to as "the evil Kotick" by someone on the
development team which suggests that he drives them hard and forces them to stick to
their production schedule, which is a good/bad thing). ATVI has a market cap much less than
BROD..(but, also less capital, but now more comparable with the convertible debenture
offering.) but much, MUCH more potential.
<<<off topic>>> I agree with you about the trend for cheaper and cheaper
computers. We may not see the end of consoles...there's just something about that
less than $200 price point that makes them so appealing...you can't get there on
a PC after you add on hard drives, floppies, monitor, etc. but certainly, PC's
are going to be much more powerful and are going to be able to exploit
hardware changes much more rapidly than consoles. Look at the Playstation.
Even though it may have a shelf life until 2000, it's hardware is becoming
quickly obsolete. But THEY can't change that! Unlike upgrading to a Voodoo2
board or something. Thus, the games on PCs will be much more cutting edge (witness Q2)
and become ever more increasingly popular as a games platform, especially as
you said, as the price of PCs drop. Apparently, the next Sony Playstation
or was it Sega's thing...I don't remember...but it's going to have
a 200 MHz chip in there! But by the time it comes out, we'll have
300-400 Mhz common on PCs.
The outlook for PCs is exceptionally bright...but I don't think consoles are going away anytime
soon. Just think of ATVI as being ahead of their time
and having to slow down to take advantage of what's happening now!
I'm sorry to have rambled so much and repeated much of what I have said before
over and over again. This post is meant for you, ATVI board followers,
but most importantly me. Peter Lynch is often quoted as saying..."If you
can't describe what your company does in a page or more, you shouldn't be owning it"
Well after going through all this, I'm not afraid at all of owning ATVI (I wasn't anyway)
and may buy some more if it goes lower.
Best wishes and I'm glad you didn't get too beat up by the freefall on Friday.
I was down about 4% but then again, I was up 10% since the start of the year!
Tom C.
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