Activision Shares Fall On Cautious Outlook

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Shares of video game publisher Activision Blizzard Inc. dropped more than 5 percent Thursday following the company’s first quarter earnings report.

The Santa Monica company reported better-than-expected results for the first part of the year on Wednesday, but the drop in share price reflected Activision’s more troubling results.

Popular online game “World of Warcraft” lost 1.3 million subscriptions, nearly 14 percent of its user base, during the first quarter. Subscriptions have fallen nearly 19 percent since the same period last year as more gamers move to free online games.

Activision Chief Executive Bobby Kotick noted in the report that despite subscription declines, “World of Warcraft” is still the largest subscription-based massive multiplayer online role-playing game (MMORPG) in the world.

The company is also cautious regarding full year results, citing the disappointing launch of Nintendo’s WiiU console and global economic challenges as factors that could hurt traditionally strong holiday sales.

“While we have had a solid start to the year, we now believe that the risks and uncertainties in the back half of 2013 are more challenging than our earlier view, especially in the holiday quarter,” Kotick said in a statement.

For the quarter, Activision reported net income of $456 million (40 cents a share), up 19 percent from the same period a year earlier. Revenue rose 13 percent to $1.3 billion.

Excluding one-time items, net income was 17 cents a share, beating Wall Street estimates of 11 cents a share.

Shares closed Thursday down 87 cents, or nearly 6 percent, to $14.39 on the Nasdaq.

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