I'm neutral on ATVI here. They're not particularly cheap considering growth is a question mark. The Hawks franchise and Ride looks in big trouble. Can next years CoD grow past this years? I wouldn't bet on it, especially if the rumored setting of Vietnam is accurate. Particularly in Europe that's not as interesting as Modern Warfare. And the music genre looks to be in steep decline, with DJ Hero likely a bomb considering it's heavily discounted already. Their console division, ex MW2, has been a disaster this year with bombs and delays.
OTOH, I have high hopes for Blizzard next year and Battle.net, which I expect will start charging Live type subs and will be a high margin earner. This could certainly offset console weakness and Battle.net contribution isn't being talked about by any analysts... yet, AFAIK.
$10 is as low as it's likely to go so I'll be more bullish if it drifts there.
One thing re the selling is that most of those options were due to expire in April 2010. It's obvious looking at Wolfenstein, Ride, Prototype, delays of Starcraft 2, Blur and Singularity, why they chose to bail throughout 2009 instead of waiting for early 2010.
As usual in the sector, it rarely pays to buy while multiple execs are selling.
In ATVI's case they're only squeaking by thanks to buying several cents worth of EPS with buybacks, and MW2 exceeding most expectations. Which as I said creates a new problem in terms of the next CoD growth.
Not much downside. Figure a stable EPS of 60-80c and $2.50 or so cash, and $10 should be the bottom. I also expect Kotick to use the cash to acquire earnings to replace the GH fad. I still think TTWO is a viable candidate here. In the right hands that could be very successful. Not in Zelnick's hands though.