Some interesting stuff on ATVI:
From Multimedia Wire:
Activision's European Distribution Will Pay Off in '99, VP Says
Activision's [ATVI] acquisition of distributors CentreSoft (U.K.)
and NBG late last year will generate close to 45% of the company's
revenue and 50% of its earnings per share (EPS) for fiscal '99, John
Baker, SVP of corporate development, tells MMWire.
Activision paid $35m for the distributors, which are on track to
contribute $160m in revenue and $0.30/share in EPS, based on what the
company is currently advising analysts. First Call consensus EPS
estimates for Activision are at $0.60/share. The company is expected
to generate about $360m for the fiscal year, which ends in March.
"The distribution assets acquired in Europe are not low-margin
businesses. They have a lower gross margin-in the high 'teens'-
certainly less than our publishing margins, and operating margins are
in the high single digits," he says. "No one in the industry has
better operating margins than that."
CentreSoft's operating model is given credit for the healthy
margins. It has a niche position in owning and controlling the
independent distribution channel that makes up approximately 15% of
the market (mid 'teens' for the PC segment and high 'teens' for
consoles). CentreSoft owns 50% of the independent slice of the market.
Similar to the US, many publishers go "direct" in Europe, or through
mass-market distributors servicing the larger chains.
Activision saw an opportunity to sew up exclusive arrangements
with numerous publishers such as Sony, Eidos [EIDSY], Ocean,
Mindscape, Virgin, to represent its products in the "mom and pop"
market.
CentreSoft Germany, the former NBG, is in the process of
transplanting the CentreSoft model into other markets in Europe. Baker
listed France, Benelux, Spain, Italy and Scandinavia as attractive
markets to grow into. He also named Australia, New Zealand and Latin
America as areas where exclusive representation into the independent
channel could pay dividends. |
