If you click on a link and make a purchase we may receive a small commission. Read our editorial policy.

Pachter: Activision revenue may be up by $100m

Blizzard's deal with NetEase worth USD 140m annually, says the Wedbush analyst

Activision Blizzard's non-GAAP revenue for the first quarter could be as high as USD 650 million, up from the previous estimate of USD 550 million, according to Wedbush analyst Michael Pachter.

Following Activision's report that it expects to exceed revenue targets, Wedbush estimates that the increase could be as high as USD 100 million.

Despite this, the financial firm stuck to its own estimate that earnings per share for the first quarter will come in at USD 0.04 - although says it could be as high as USD 0.05.

Pachter commented on yesterday's announcement that Activision had entered into a deal with NetEase to operate World of Warcraft in China, concluding its previous deal with The9.

"Under the terms of its contract with The9, Activision Blizzard received a royalty of 22 per cent on revenues generated in China," he explained. "We estimate that the current arrangement generated revenues of around USD 50-55 million annually."

He added: "We estimate that the royalty rate [from NetEase] will increase to at least 55 per cent, and that the new arrangement will generate revenues of over USD 140 million annually."

The securities firm expects the increased royalties to contribute USD 0.02 to the share price in 2009, but suspects the publisher already took the deal into account when setting its guidance earlier this year.

Wedbush Morgan rates Activision a "strong buy", with a price target of USD 13.75.

More News

Latest Articles