Gaming stock to watch: Activision Blizzard, Inc. (NASDAQ: ATVI)

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Activision Blizzard, Inc. (NASDAQ: ATVI) stock rose over 2.40% in the pre-market session of Feb 7th, 2020 (Source: Google finance) post the fourth quarter of FY 19. Net bookings were of $2.7 billion, which were $62 million above the November outlook. The company generated Q4 operating cash flow of $918 million. Annual operating cash flow was $1.8 billion, which was higher year-over-year due to lower working capital and cash taxes. The cash and investments at the end of December was approximately $5.9 billion and the company has ended the year with a net cash position of approximately $3.2 billion.

For fiscal 2020, on a GAAP basis, the company expects the revenues to be of $6.45 billion, including net deferrals of $275 million. The company expects the net bookings to be of $6.73 billion. Product cost, game operations and distribution expenses to be of 22%, operating expenses, including software amortization of 50%, and a GAAP only restructuring charge to be of approximately $50 million. The company expects the GAAP tax rate to be of 19%, GAAP and non-GAAP share count of $778 million and GAAP EPS to be of $1.85. For 2020, on a non-GAAP basis, the company expects product cost, game operations and distribution expenses to be of 23%. Operating expenses including software amortization is expected to be of 44%. The company expects a tax rate to be of 19% and non-GAAP EPS to be of $2.22, including net deferrals of $0.13.

On a GAAP basis for Q1, the company expects the revenues to be of $1.64 billion, including the net recognition of deferrals of $365 million. The company expects net bookings of $1.28 billion. Product cost, game operations and distribution expenses to be of 21%, operating expenses including software amortization to be of 48%, and a GAAP only restructuring charge of approximately $35 million. the company expects the tax rate to be of 17%, GAAP and non-GAAP share count of $775 million and GAAP EPS to be of $0.55. For Q1, on a non-GAAP basis, the company projects the product cost, game operations and distribution expenses to be of 21%, and operating expenses including software amortization to be of 41%. The company expects a tax rate of 17% and non-GAAP EPS to be of $0.66, which includes the net recognition of deferral of $0.31.

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