News Summary for Thursday, August 2, 2012
There are several major financial releases today, but none of the big boys have good news to share. Activision Blizzard appears to be going to great lengths to avoid drawing attention to dropping revenues from World of Warcraft, while Sony doesn't want anyone to notice how poorly the Vita is selling. At least Mad Catz reduced its borrowing costs. Read on for more details on all the news of the day...
- Activision Blizzard announced its financial results for its second fiscal quarter ended June 30, 2012. For the quarter, Activision Blizzard reported net income of $185 million, compared to net income of $335 in the same quarter the previous year. While the company wanted to place focus on the sales of Skylanders Spyro's Adventures, the Call of Duty franchise and Diablo III, this distracts from the clearly precipitous drop in World of Warcraft revenues. Certainly, WoW remains the most popular subscription massively multiplayer online game, but GAAP Net Revenues from "Digital Online Channels" for the quarter dropped to $343 million from $423 million. Worse than just a $100 million drop, the $343 number probably includes significant non-Wow income missing from previous years as the company expands its online distribution. For example, does the current number include sales of downloadable copies of Diablo III? If so, World of Warcraft revenues might be dismal.
- Sony announced its financial results for its fiscal first quarter ended June 30, 2012. For the quarter, Sony reported a net loss of ¥24.6 billion (around $312 million), compared to a net loss in the same quarter the previous year of ¥15.5 billion. Sony as a company may be losing more money, but how are its games operations doing? Sony's game operations reported an operating loss of ¥3.5 billion, compared to operating income in the same quarter the previous year of ¥4.1 billion. Sony didn't explicitly say that the Vita isn't offsetting the decline expected from the tail end of a particularly long console cycle, but the fact that Sony lumps Vita numbers in with the PSP suggests things aren't going well enough to want to draw attention to the new handheld. Sony also drastically revised downward its expectation for handheld device sales.
- Hardware manufacturer Mad Catz has extended its secured working capital credit facility with Wells Fargo Capital Finance. The extension isn't particularly significant, since this is presumably a revolving credit line secured by accounts receivable. What is significant is that Mad Catz's new borrowing rate is 1.50% lower (based on U.S. Prime +0.50%, rather than Prime +2.00% (the real rate actually depends on coverage ratios, but that's a helpful approximation). That should help Mad Catz a bit.