Colby,
Is there some way you can post a summary for the earnings revision?
Why do you think that Alex Brown is revising earnings downward? Normally the 4th quarter is strong for ATVI.
Normally, there are product returns, but not until the title has run its course. Dark Reign, Hexen II are not likely being returned in bulk given that the expansion pack is coming out for both and there are still promotional rebates out for them. The same thing could be said about Heavy Gear and Zork GI. I wouldn't expect returns to show up until 1st or 2nd quarter, anyway, given that these titles were released in late November/December. There is no way that Quake II is being returned. Nightmware Creatures was a weak title.
Now we have follow-on orders for Quake II, OEM agreements for Heavy Gear and Battlezone, shipment of Battlezone, and Pitfall 3D coming out at the end of March. I asked the question previously, "why was ATVI beefing up the 4th quarter?". A case might be made that insiders knew that the 4th quarter was not shaping up well and pushed a lot of releases to the 4th quarter, while also selling stock. This makes some sense. But that was in late January when the stock was at $16.5. The stock now stands at $11 3/8....a 30% decline.
Another case could be made that when selling a stock to Wall St., a company likes good year to year comparisons. Insiders also knew that the period right after 3rd quarter earnings tends to be weak for the stock and why not sell now if the stock can be bought cheaper later? This, too, accounts for the beefing up of the 4th quarter and the insider sales as well.
Who's right?
I'm willing to bet that we are near the bottom now. Maybe one or two more days of weakness. I guess we'll see!
Tom |
