For Immediate Release
Chicago, IL – December 14, 2011 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Activision Blizzard Inc. (ATVI - Snapshot Report), Electronic Arts Inc. , ADTRAN Inc. (ADTN - Analyst Report), Nokia Corporation (NOK - Analyst Report) and Siemens AG .
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Here are highlights from Tuesday’s Analyst Blog:
A New Record for “Call of Duty”
Activision Blizzard Inc.’s (ATVI - Snapshot Report) most prolific franchise “Call of Duty” continued its impressive run after its latest instalment “Modern Warfare 3” garnered sales of $1.0 billion in just 16 days, beating the earlier record of 17 days set by the feature film “Avatar” in 2009.
Activision’s online service Call of Duty Elite is also growing rapidly, with more than six million registered players. Activision has sold more than one million premium subscriptions to date. Going forward, Activision expects to sell more than 25 million units of Modern Warfare 3, which is expected to boost revenue growth for the upcoming quarter. Activision forecasts revenues of $2.17 billion for the upcoming fourth quarter.
The Call of Duty franchise has managed to establish one of the most loyal fan bases and topped the most played games list in 2010. Currently, the Call of Duty community has more than 30 million gamers and has already raked in $6.0 billion in sales (life to date). Considering the stupendous growth of the social and free-to-play games in recent times, the popularity of “Call of Duty” is phenomenal.
This apart, the strong growth of the online service is also a reflection of Activision’s continuous focus on digital channel development, which accounted for 62% of the total revenue in the third quarter. In the nine months ended September 30, 2011, digital revenue increased 16.0% year over year, primarily based on Call of Duty’s expanding online content, an increase in the number of multi-player communities and a higher installed base of high-definition (HD) online enabled hardware.
According to one of the studies by Strategy Analytics, the global online gaming market is currently worth $4.0 billion and is expected to triple in the next five years. This bodes particularly well for Activision, as the company continues to invest in developing games such asWorld of Warcraft, upcoming instalments of Call of Duty, Bungie Universe, Skylanders Web World and StarCraft II, which boasts a strong digital customer base.
However, we believe that the increasing popularity and higher consumer spending on mobile games and social networking games will cannibalize the company’s digital sales going forward. We believe that Activision’s limited presence in the social and mobile gaming platforms, as well as significant competition from Electronic Arts Inc. , which has a significant exposure to these gaming segments, will hurt profitability going forward.
We remain Neutral over the long term (6-12 months). Currently, Activision has a Zacks #2 rank, which implies a Buy rating in the near term owing to its healthy product pipeline for the holiday season.
ADTRAN Eyes Broadband Biz
N etworking solution provider, ADTRAN Inc. (ADTN - Analyst Report) recently announced plans to acquire Nokia Siemens Networks’ fixed-line Broadband Access business.
The deal is expected to close by April next year, upon regulatory approval from concerned authorities. According to ADTRAN, the acquisition is expected to remain neutral for the first fiscal year and thereon have a positive bearing on its diluted earnings per share.
The transaction would involve the acquisition of the intellectual properties, technologies and the established customer base of Nokia Siemens Networks’ Broadband Access unit. Further, it would entail the transfer of manpower to ADTRAN along with an entry into Nokia Siemens Networks’ established customer base.
Finland based Nokia Siemens Networks was established in 2007 as a joint venture between two giants, Nokia Corporation (NOK - Analyst Report) and Siemens AG . Given the completion of the proposed acquisition, ADTRAN is expected to benefit from the widespread market presence of Nokia Siemens Networks across 150 countries including emerging markets like India, China and Africa.
Further, the deal will remain accretive to ADTRAN’s professional services in domestic and overseas markets and enhance business opportunities with Tier 1 and Tier 2 carries. The company remains focused on its strategy to build positions in new markets and generate incremental sales from its new customer Telmex. Further, ADTRAN is moving into a new arena with the buyout of Bluesocket, a privately held U.S. company that specializes in wireless network solutions with virtual control system.
We believe this global expansion will contribute to ADTRAN’s growth trajectory over the next several years and be favorable for its 2012 strategy of expanding the international customer base.
Consequently, we are maintaining our long-term Neutral recommendation on the stock supported by a Zacks #3 Rank (Hold).
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