Advertisement
U.S. markets closed
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow 30

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Russell 2000

    2,124.55
    +10.20 (+0.48%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Silver

    25.10
    +0.18 (+0.74%)
     
  • EUR/USD

    1.0779
    -0.0014 (-0.13%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • GBP/USD

    1.2622
    -0.0000 (-0.00%)
     
  • USD/JPY

    151.2860
    -0.0860 (-0.06%)
     
  • Bitcoin USD

    70,446.39
    +831.49 (+1.19%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,342.50
    +174.43 (+0.43%)
     

The Zacks Analyst Blog Highlights: Electronic Arts, Activision, Microsoft, Zynga and CBS

For Immediate Release

Chicago, IL – August 13, 2012 – 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 Electronic Arts (EA), Activision (ATVI), Microsoft Corp (MSFT), Zynga (ZNGA) and CBS Corporation (CBS).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Friday’s Analyst Blog:

Video Game Sales Down in July

Video game retail sales declined for the eighth consecutive month in July 2012. According to market research firm NPD, U.S video game store sales slumped 20.1% year over year to $548.8 million in the month of July. Although the year-over-year decline narrowed from the prior-month level of 29%, dollar sales deteriorated from $699.8 million reported in June.

Lower number of new game releases (which approximately accounts for 50% to 60% of total sales), as publishers continue to postpone titles for the upcoming holiday season, were a major cause behind this decline. Ongoing transition from physical to digital platform also hurt sales.

This is evident from the fact that both hardware and software sales continued to decline in July. Hardware fell 32% year over year to $150.7 million, while software sales plunged 23% year over year to $260.7 million.

NPD noted that consumer spending on used games, rentals, subscriptions, mobile games, social network games, digital full game downloads and add-on content jumped 17% year over year to $1.47 billion in the second quarter. However, this strong growth was not enough to offset the significant decline in physical sales, as overall consumer spending dropped 16% annually in the second quarter of 2012.

According to NPD, NCAA Football 13 from Electronic Arts (EA) topped the game sales chart brushing aside June topper Warner Bros. published Lego Batman 2: DC Heroes. Activision’s (ATVI) The Amazing Spiderman came in at #3.

Microsoft Corp’s (MSFT) Xbox 360 was again the top-selling console for the 17th straight month with 203k units sold. However, this was down from 277k sold in the year-ago quarter. As per NPD, only Nintendo’s DS and 3DS shipments increased on a month-over-month basis in July.

According to Bloomberg, Nintendo is expected to release its new 3DS XL with 90% larger screens and a new “Super Mario” game in August 2012. The company is also expected to offer its new Wii U later this year. We believe that the release of this new gaming hardware will drive video game retail sales going forward.

Our Take

We believe that the ongoing transition from the physical to the digital platform will ultimately benefit the video game industry over the long term. As compared to the physical platform, digital games are more profitable since they require minimum packaging cost. This cost effectiveness has helped publishers to use the digital format to keep a popular franchise running profitably over a long period of time.

Online gaming is also expected to witness growth at the expense of retail sales, given the growing popularity of digital distribution and free-to-play browser games. Consumers are increasingly spending more on smartphones and portable devices (such as the iPad) as compared to traditional devices for playing online games. This trend keeps us optimistic on the video game industry over the long term.

We believe that publishing companies with a focus on the digital segment will stand out even amid sluggish market conditions. For instance, some companies like EA, Zynga (ZNGA) and Activision are well positioned to benefit from this trend going forward.

However, lack of visibility around the monetization of the digital platform (particularly social & casual online games) compels us to remain on the sidelines. Since most of the digital and online games are offered as free-to-play, they remain significantly dependent on advertising revenues and online sales of the in-game virtual items. Moreover, the highly fragmented video game market continues to witness increased competitive pressures, which are hurting overall profitability.

We maintain our Outperform recommendation on Activision over the long term. We remain Neutral on EA and Zynga over the long term (6-12 months).

We believe that growing popularity of the Call of Duty franchise will drive Activision’s growth story in the near term. Currently, Activision has a Zacks #1 Rank, which implies a “Strong Buy” rating in the near term. EA and Zynga both have a Zacks #3 Rank, which implies a Hold rating in the near term.

Earnings Scorecard: CBS Corp.

CBS Corporation (CBS), one of the leading media company in United States and worldwide, reported its second-quarter 2012 results on August 2, 2012. The Wall Street analysts had almost a week to ponder on the earnings results and eventually make their estimates revision. Below, we will cover the results of the company’s recent earnings announcement, subsequent estimate revisions by analysts as well as the Zacks Rank and long-term recommendation for the stock.

Earnings Report Review

CBS Corporation’s quarterly earnings of 65 cents a share surpassed the Zacks Consensus Estimate of 58 cents and jumped 12% from the year-ago quarter.

Management hinted that total revenue of $3,476 million dropped 3% over the prior-year quarter due to difficult year-over-year comparisons. The prior-year quarter, benefited from a multi-year digital streaming contract and the NCAA men’s basketball championships, which was aired in the first quarter of the current year. Total revenue also fell short of the Zacks Consensus Estimate of $3,543 million.

(Read our full coverage on this earnings report: CBS Beats on Bottom Line)

Agreement of Estimate Revision

The estimates showed multi-directional moves, reflecting conflicts between the analysts. Out of 21 estimates for the third-quarter of 2012, 7 were trimmed while 2 were revised upwards, whereas for the fourth-quarter of 2012, out of 20 estimates, 8 moved up and 3 went down, in the last 7 days.

Most of the estimates were trimmed for the third quarter following the plunge in advertising and content group revenue in the second quarter 2012. Advertising revenue declined 3% to $2,142 million, whereas content licensing and distribution revenue slipped 8% to $816 million.

However, some of the analysts believe that CBS is comfortably positioned to drive revenue growth in the coming quarter through its strategic initiatives and operating efficiencies, and thus moved their estimates upwards.

For the fourth-quarter 2012, majority of the analysts moved up in regard to their estimates. The presidential elections will be accretive to the company’s results during the year-end. Moreover, revenues from retransmission continue to grow at a good pace. Further, the company is increasingly getting reverse compensation from its affiliates, marking a new source of revenue.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Media Contact
Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

http://www.zacks.com

Read the analyst report on EA

Read the analyst report on ATVI

Read the analyst report on MSFT

Read the analyst report on ZNGA

Read the analyst report on CBS

Zacks Investment Research



More From Zacks.com

Advertisement