CHICAGO, Aug. 5, 2011 /PRNewswire/ -- 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.
(Nasdaq: ATVI), DIRECTV (Nasdaq: DTV), DISH Network
Corp. (Nasdaq: DISH), AT&T (NYSE: T) and Verizon
Wireless (NYSE: VZ).
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Here are highlights from Thursday's Analyst Blog:
Activision Beats, Raises Outlook
Activision Blizzard Inc.'s (Nasdaq: ATVI) robust fiscal
second quarter 2011 results surpassed the Zacks Consensus Estimate
on both the top and bottom lines. Activision earned 9 cents per share (including stock based
compensation but excluding one-time items), well ahead of the Zacks
Consensus Estimate of 4 cents and
management's guidance of 4 cents.
Reported earnings jumped 125.0% from the year-ago quarter.
The quarterly results were driven by the online integration of
its products and digital revenue streams, including Blizzard's
World of Warcraft and Activision's Call of Duty,
which also continued to push the retail revenue stream.
Outlook
For the forthcoming quarter, Activision expects an EPS of
1 cent on a non-GAAP basis and
revenues of $530.0 million. The Zacks
Consensus Estimate projects an earnings of 6
cents and revenue of $641
million for the upcoming quarter.
For full year 2011, Activision raised its outlook both for EPS
and revenues. EPS (non-GAAP) is expected to be 77 cents, up from the prior outlook of
73 cents and was above the Zacks
Consensus Estimate of 68 cents. Total
revenue (non-GAAP) is estimated to be $4.05
billion, up from prior guidance of $3.95 billion, but was in line with the Zacks
Consensus Estimate of $4.05
billion.
Our Take
Activision Blizzard has posted better-than-expected results on
the back of top-line growth and online expansion.
We expect the company's initiatives to expand in the high-margin
digital business segment to pay rich dividends in the forthcoming
quarters. Additionally, the title releases scheduled in the
forthcoming quarter will prove beneficial for Activision.
DIRECTV Continues Upward Movement
DIRECTV (Nasdaq: DTV), the largest satellite TV operator
of the U.S., declared excellent second quarter 2011 financial
results before the opening bell today. The solid result was the
combined effect of a double-digit revenue growth, significant
margin expansion, and better-than-expected net customer
addition.
Management's strategy to target high-end customers paid-off well
as the demand for the company's HD channels and digital-video
recording services sky rocketed in the reported quarter.
During the reported quarter, DIRECTV spend $1.51 billion to repurchase its own shares.
Management is also confident that the company's full-year EPS will
jump to $5.0 in 2013 from
$2.3 in 2010.
Second-quarter 2011 total revenue came in at $6,600 million, an improvement of 13% year over
year, surpassing the Zacks Consensus Estimate of $6,539 million. This was primarily attributable
to massive subscriber growth in Latin American regions, solid
average monthly revenue per subscriber growth, and increasing
contribution from the U.S.
Quarterly GAAP net income was $701
million or 91 cents per share
compared with a net income of $543
million or 42 cents per share
in the year-ago quarter. Second-quarter 2011 adjusted (excluding
one-time gains) EPS of 88 cents
easily surpassed the Zacks Consensus Estimate of 85 cents.
Quarterly operating profit before depreciation &
amortization (OPBDA) was $1,846
million, up 12.9% year over year. Operating profit in the
second quarter of 2011 came in at $1,230
million, up 21.8% year over year, primarily due to gross
profit associated with higher revenues, partially offset by an
increase in subscriber acquisition costs.
During the first half of 2011, DIRECTV generated $2,404 million of cash from operations compared
with $2,494 million in the prior-year
period. Free cash flow (cash flow from operations less capital
expenditures) in the reported period was $1,108 million compared with $1,483 million in the year-ago quarter.
At the end of the second quarter of 2011, DIRECTV had
$2,528 million of cash & cash
equivalents and $13,462 million of
outstanding debt on its balance sheet compared with $1,502 million of cash & cash equivalents and
$10,510 million of outstanding debt
at the end of fiscal 2010.
DIRECTV U.S. Segment
Quarterly total revenue was $5,277
million, up 7% year over year, primarily due to strong ARPU
growth and larger subscriber base. Quarterly ARPU increased 3% to
$90.58. Quarterly operating profit
before depreciation & amortization inched up 4% to $1,446 million and operating profit climbed 13%
to $1,016 million.
Average monthly subscriber churn rate in the reported quarter
was 1.59% compared with 1.51% in the prior-year quarter. Quarterly
net subscriber addition was 26,000 compared with 100,000 in the
year-ago quarter. As of June 30,
2011, DIRECTV U.S. had 19.433 million subscribers, up 4%
year over year.
DIRECTV Latin America Segment
Quarterly total revenue was $1,254
million, up 46% year over year, resulting from continued
strong subscriber growth including a significant increase of 14% in
second- quarter net subscriber additions of 472,000. Quarterly ARPU
increased 13.3% to $64.56due to price
increase and higher sales of HD and DVR services. Quarterly
operating profit before depreciation & amortization increased
60% to $423 million and operating
profit jumped 72% to $241
million.
Average monthly subscriber churn rate in the reported quarter
was 1.81% compared with 1.63% in the prior-year quarter. As of
June 30, 2011, DIRECTV Latin America
had approximately 6.707 million subscribers, up 28.4% year over
year.
Recommendation
We maintain our long-term Neutral recommendation on DIRECTV.
Currently, it holds a short-term Zacks #3 Rank (Hold) on the stock.
Within the satellite TV industry, DIRECTV is facing competition
from its nearest rival DISH Network Corp. (Nasdaq: DISH).
Moreover, the U.S. telecom giants, AT&T (NYSE: T) and
Verizon Wireless (NYSE: VZ) are increasingly rolling out
their fiber-based network in order to provide video services.
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