U.S. Markets open in 1 hr 49 mins

Activision stock soars to highest price since '80s

SAN FRANCISCO (AP) -- Activision Blizzard Inc.'s stock soared to its highest price in decades after the video game maker's latest quarterly report convinced investors that the company will be one of the big winners in the battle to entertain people.

The shares surged $2.58, or 15 percent, to $19.75 in Friday's early afternoon trading. The stock hit $19.95 earlier in the session, a price unseen since the late 1980s when Activision was known as Mediagenic.

Wall Street is embracing Activision because it is becoming increasingly apparent that the Santa Monica, Calif., company has assembled a mesmerizing line-up of video games likely to yield steady earnings growth.

The latest evidence came late Thursday with the release of Activision's fourth-quarter results — a three-month period that included the critical holiday shopping season.

Both revenue and earnings topped analysts' projection for the quarter, thanks largely to two of the cornerstones in Activision's franchise, "Call of Duty" and "World of Warcraft." A children's game, "Skylanders: Swap Force," also fared well in the quarter, easing concerns that it might be hurt by a new entrant in the niche, Walt Disney Co.'s "Infinity."

Coming off its fourth-quarter performance, Activision "continues to be the name to own if you want long-term exposure to the video game industry," Macquarie Securities analyst Ben Schachter wrote in a research note.

The pipeline looks promising for this year, with Activision planning updates to "Diablo III" and "World of Warcraft," as well as a highly anticipated new game called "Destiny." In a research note, Wedbush Securities analysts Michael Pachter said "Destiny" has the potential to be a blockbuster that generates at least $500 million in sales after its scheduled release in September.

Pachter's biggest worry is whether video game players eventually will grow weary "Call of Duty" and "World of Warcraft" even as Activision freshens up those franchises with new twists.