Recap of CNBC's Fast Money, Tuesday June 17.
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Will Goldman Lose its Shine? Goldman Sachs (GS)
In spite of decent news from Goldman, the Dow dropped and stocks were mediocre. While the investment bank’s quarterly earnings declined 11% on slower trading, Goldman still avoided much of the credit crisis woes that have plagued other banks. However, Fox Pitt Kelton securities analyst David Trone says it will be a while before Goldman is a buy, because government regulation is looming over all the brokers; “their long term returns are going to be permanently suppressed and in my opinio
At least one of my stocks is doing pretty well in this terrible, depressing market environment. Activision (NASDAQ: ATVI) hit a new 52-week high of $36.84 on Tuesday. It closed a little below that, but it was a great, high-volume day for the stock, one that saw the shares rise almost 5%.
Yes, with the Dow Jones index shedding 100 points, with every other stock in my portfolio in the red, including MFA (NYSE: MFA), which closed down to $6.66 -- the number of the beast, my
Activision (NASDAQ: ATVI) is a leading developer, publisher and distributor of interactive entertainment and leisure products. Offerings include such action titles as Tony Hawk's Underground, Doom, and Call of Duty. The firm also makes games based on licensed properties associated with the films Star Wars, Spider-Man, X-Men and Shrek. Activision games operate on Sony (NYSE: SNE), Nintendo and Microsoft (NASDAQ: MSFT) console and porta
5/14 - "EA was forecast to only break-even on a non-GAAP basis, so the difference was a nice $0.09. In terms of operational cash flow, EA increased the metric by 33% during the fourth quarter, but for the full year, operational cash flow decreased 15%. Ah, such is life, I guess. Nevertheless, EA produced 27 titles that sold over a million units this year -- three more than in the previous year. Fifteen of its titles sold over 2 million units -- five more than the last fiscal period. Titles such as Army of Two and Rock Band, as well as various sports franchises, drove the results."
"But EA ...
5/14 - "Although the quarter beat analysts' expectations on an adjusted basis, many investors seem to be thinking "game over," especially since EA turned in a rather tepid forecast and gave reason to believe that the pesky "enhancing profitability" portion of EA's picture remains fuzzy at best.
EA also said it will stop offering quarterly forecasts. Although corporations' forecasts can be unreliable, I'm not sure what EA's decision to stop giving them at all -- at a time when many investors are already wondering what the heck its deal is -- says about its chances of getting its act togethe...
Take-Two's (TTWO) success with Grand Theft Auto 4 was and is simplybreathtaking. The game made over $500 million in its first week.<!----> To putthat in perspective, the Spider-Man movie, over its lifetime in US boxoffice sales, adjusted for inflation, made $479 million. So in oneweek, GTA4 surpassed the entire take of Spider-Man, one of the mostsuccessful movies of all time. Think about it. In case you'rewondering, yes, I've played GTA4 (thanks again for the gift, lovely andvideo-game enabling wife!). Yes, it's fun. Yes, it's for adults, butyou've seen much worse on TV or at the movies. Do
The acquisition of Blizzard Entertainment by activision will prove to be a very profitable move.
Blizzard's flawless, record setting track record of excellence in computer game sales will be continued throughout 2008 with the release of the WOW expansion Wrath of the Lich King and Starcraft II. Worldwide sales records will be broken boosting profits dramatically, as was the case for both prequels.
Both companies make good games. Their games don't collide (Blizzard is more focused on strategic games). Also ATVI had several stock splits (never reverse) over the years. So yeah, this stock price will definitely will go up before they merge in 2008.
Every once in a while a game software company hits it big with a franchise. Nintendo has it in Legend of Zelda, Donkey Kong and Mario Brothers. Take Two was the envy of all videogame companies with its GTA series and now we have Activision rocking out with record sales of its Guitar Hero games. This will be a blow out Xmas season for this title. It will be the "must buy" gift. True, it is priced into the stock somewhat, but there has been recent weakness thanks to the overall market. It's time to get in.
These 2 factors will drive Activision in the coming quarters up until the peak holiday season. With a great line up of games, especially the titles that they have coming out in the normally slow summer months, Activision is on pace to have their best year ever as a public company. If you're going to buy one game publisher I would suggest it be Activision for these reasons. Strong buy rating. 27 dollar price target by years' end.
With the release of the Nintendo Wii and Playstation 3, the uncertainty in the video game industry should begin to disappear. I believe these systems should both sell well over the holiday season, barring that there aren't any major supply problems. I think you will see the video game makers begin to pick up some more steam and consumers return to the market to purchase new games. Look to hold this stock for 1 or 2 years and get a return of 30% or more.
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