ActivActivision beats Wall Street's profit forecast

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ActivActivision beats Wall Street's profit forecast

- Activision BlizzardActivision Blizzard Inc., now at the centre of controversy over harassment and sexism in the industry, reported quarterly results that beat Wall Street projections and raised its outlook for the year.

The maker of popular games like Call of Duty and World Warcraft said that 2nd quarter profit excluding some items totaled 91 cents a share. That compared with analysts' estimates of 75 cents. Adjusted revenue jumped to $1.92 billion, beating projections for 1.89 billion.

While sales beat estimates, sales soared from a year ago. The industry is suffering from a hangover after a surge in play una year ago during the early days of the Covid 19 Pandemic and lockdown. Rival Take-Two Interactive Software Inc. on Monday released a tepid forecast for the remainder of its year, sending the stock down.

Activision, the largest U.S. gaming company, is also contesting a legal challenge to the so-called bro culture in games, a term for sexism and harassment in the male-dominated industry.

These accusations have dogged the business for years and came to the fore again last month when Activision was sued by a California state agency, which claimed women at the company were subjected to constant harassment, unequal pay and retaliation.

In addition, an Activision investor sued the company in federal court in California Tuesday, asserting it knew of the ongoing state investigation into its workplace culture but omitted that from public disclosures.

The company, based in Santa Monica, California, said it's taking steps to improve the workplace environment. On a call Wednesday, executives will likely be asked about the issue with analysts.

Activision announced that J. Allen Brack, president of its Blizzard division, will leave the company on Tuesday morning. Many of the allegations in the State suit took place before he was named to the post. Activision accounted for about a fourth of Blizzard's $8.01 billion in sales last year, making its sales about a quarter of the revenue reported by the company.

The company named Mike Ybarra, 18 years veteran of Activision, and former Microsoft Corp. executive Jen Oneal, who came aboard two years ago as new leaders of the division.

Activision shares rose in extended trading with Activision after the announcement of results were announced as much as 6%. The stock lost 3.5% to $79.83 at the close in New York. Tencent Holdings Ltd. China's most valuable company fell 6.2%.

Bobby Kotick, Activision's chief executive officer for three decades, said in late July that the company hired the law firm WilmerHale to review the company's policies, admitting management had been tone deaf.

Hundreds of employees turned out in front of Activision offices last week to protest the lawsuit and show their support for the company's response.

Kotick, 58, also faced investor criticism over his pay, which amounted to $154.6 million last year, mostly in the form of multi-year stock awards.

The company took the unusual step of prolonging the say-on pay referendum after its annual meeting in June, before announcing it was narrowly approved. The merger supervisor of Activision complained of'misleading information that could have swayed shareholders against its executive compensation plan.

For the third quarter, Activision expects earnings of 65 cents a share, including items, 10 cents short of Wall Street estimates. Sales will be $1.85 billion, above analysts' views The company now forecasts full-year profit of $3.76 a share and revenue of $8.65 billion, both up from its projection three months ago.