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Author: Jognils One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2674  
Subject: Stock of the Week: Activision (ATVI) Date: 2/25/2008 8:27 PM
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For those who have started doing some research on Activison, Inc. (ATVI), this is the place to discuss your work. I've started doing a little bit of profitability analysis, and I'm hoping to post what I've found soon.

One issue I'm running into, which I was hoping TMF1000 or TMFGebinr might be able to help with, is that every financial source I check seems to have slightly (or in a few cases, radically) different numbers, especially when it comes to pre-calculated ratios. I've been using Yahoo Finance and CAPS almost exclusively, but I can't figure out why between Yahoo, CAPS, and my own calculation I get three different answers even for simple ratios like the current ratio.

One thing I noticed is that the ratios posted on the two websites are usually "trailing twelve months," or TTM. Is there a standard way to calculate a TTM ratio besides using the most recent year's annual data, or are there many ways to do it?

Thanks in advance!

Jognils
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Author: awesomestockdude Three stars, 500 posts Ticker Guide Supernova Odyssey 1
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Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/25/2008 10:51 PM
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I haven't had time to start officialy researching yet but I can tell you what I do know based off of my basic observations. Looking at some of the games that ATVI made I can see why people think they are a good stock. All my friends are crazy about Guitar Hero III, WOW, and Call of Duty IV. I know that these are some of the main top games that everyone is talking about. When one game dies down another one of their games jumps to the top of the list. (Acting like Peter Lynch) Based off of what I already know about the company by observing, I can tell that this company has potential and is a good stock to research. Guess I should start doing real research.

Awesomestockdude

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Author: nlcondit Old School Fool Global Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1987 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/26/2008 2:00 AM
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Unfortunately, different services do it diferent ways. For example, some annualize quarterly results. Also, for something like PE some services will update dynamically as the price changes while others are not done as frequently. So if you are going to use the ratios given rather than calcualting yourself, I try to find out how the service is calculating a given ratio and then just stick with the answers from one service for a given ratio. Hope that helps.

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Author: Jognils One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1990 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/26/2008 4:05 PM
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All right, here's what I have so far.

2007 Gross margin - Q4: 48.6%; Q3: 35.5%; Q2: 33.8% ; Q1: 30.9%
2007 Operating margin - Q4: 27.3%; Q3: -3.0%; Q2: 6.1%; Q1: -9.3%
2007 Profit margin - Q4: 18.4%; Q3: 0.2%; Q2: 5.6%; Q1: -4.6%

Gross margin is the percentage of sales revenue left over after the cost of goods sold is deducted. A higher gross margin reflects efficiency in turning raw materials into revenue.
Operating margin is the percentage of sales revenue remaining after all operating expenses have been taken into account. A higher operating margin means the company is doing a good job of keeping sales and administrative costs low.
Profit margin is the portion of revenue retained after all expenses have been deducted, or net income. A company with a high profit margin is retaining a high level of profit for each dollar of revenue it earns.

Notes on profitability margins:
•Gross margin has risen each quarter, meaning sales are growing faster than the cost of goods sold. Excellent!
•Operating margin was very good in the fourth quarter, but Activision actually had losses from operations in quarters 1 and 3.
•Again, very good in the fourth quarter, but low profitability in the first and third quarters. I’m curious to know what type of “other income” reported on the third quarter income statement bailed ATVI out of its negative income from operations and gave it a positive net income.

I also uploaded my research using a file hosting site. I'm not sure if it will work, but here's the link:
http://www.mediafire.com/?v2emcwbhgme

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Author: Razz037 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1991 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/26/2008 6:13 PM
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Nice job Jognils.

Have you ever looked at SEC filings like the 10Q report? I know they are large reports and tedious to read through, but the more you look through them, the more familiar you will become with them and you will know what to look for.

I think you might find the answer to “other income” in there.

Razz

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Author: Jognils One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1992 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/26/2008 6:21 PM
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I have taken a brief look at several 10Qs, I just haven't had time to actually sit down and read them through or figure out how to separate the relevant information. Thanks for the tip!

Jognils

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Author: tobyas132 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1993 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/26/2008 8:40 PM
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Uh...well I told you guys that I wont be much of the person who can read graphs SO! Ive prepared some other stuff on my own...from some of my knowledge...well here I go(i got the games that are most famous in Activision)
"Points from gamespot"
1~10

Guitar hero 1/2/3: Basically uh..I think the average for the 3 guitar hero game is near the point of 8.0~9.0 which is said to be "great" from most of America so Im guessing thats some profit that Activision gives.

Call of Duty 1/2/3: This too is some where around 8.0~9.0 so Im guessing America likes it+_+

Spiderman: ok well this game is to be..around 4.0~5.0..fair to poor...Im thinking its more of a childs game..and Im going to say this because im one of those "game geeks" well...the games made out of movies..there more or likely to be bad...haha


well..There are more Ive noticed but...most of the new ones are like shrek and bee movie transformer...and more..so..haha It looks good..but I dont know...this is the most I can do..Im so terribly sorry..I look up more!..of the not stock graph related...stuff..(?)

I wish this could help...

tobyas132

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Author: Razz037 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1994 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/26/2008 9:27 PM
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Tobyas132,

Some of the basics you can mention is where in relation to the 50-day and 200 day moving average the stock price is. I see it is well above the 200-day moving average and it looks like it just turned north of the 50-day moving average which shows some momentum.

You could also look a trading volume – whether it is above or below average.

I am not much for analyzing charts either but Quillnpenn seems to be. There is an art to reading charts.

Razz

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Author: tobyas132 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1995 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/26/2008 9:35 PM
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Haha Thanks~ Razz for ur tip Ill use it very usefully!

tobyas132

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Author: TMFGebinr Big gold star, 5000 posts Top Recommended Fools Old School Fool Supernova Phoenix 1
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Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/27/2008 9:40 PM
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Hi Jognils,

Nice work. Noticed you had a couple of questions which I might be able to help you with.

Sales growth, quarterly:
Yes, differences in sequential sales (that is, from one quarter to the next) is seasonal, so there will be some big swings here. That is why most analysts look at year over year growth which is one quarter compared to the same quarter in the previous year. So the Christmas quarter is always compared with the Christmas quarter. That gets rid of the seasonal effect.

This also allows more accurate looks at gross, operating, and net margins to see how they are (hopefully) improving for the same quarters separated by a year.

If you want to look sequentially, I suggest use rolling TTM numbers, that is Q1+Q2+Q3+Q4, Q2+Q3+Q4+Q1, Q3+Q4+Q1+Q2, and so on, moving forward in time by one quarter at a time. This captures an entire year, so this also gets rid of the seasonality problem.


Return on assets or return on equity:
These are usually reported as full-year figures. So, for the net income part of this equation, use the total net income from the last four quarters. For the assets or the equity, take the average of that item over the course of that year. In other words, take the amount at the beginning of the time period, add the amount at the end, and divide by two.

The reason it's done this way is because the income statement shows what happens over the course of some time period, but the balance sheet (where assets and equity are found) are just snapshots, frozen in time. By taking the average, you convert those snapshots into a number that represents the time period.

Let me give an example using ATVI:
Net income:
Q3, 12/31/07: $272.2 million
Q2, 9/30/07: $0.7 million
Q1, 6/30/07: $27.8 million
Q4, 3/31/07: ($14.4) million
TTM: $286.3 million

Total assets:
End Q3, 12/31/07: $2,613.1 million
End Q3, 12/31/06: $1,891.5 million (this is also the beginning value for Q4)
Average: $2,252.3 million

ROA: $286.3 / $2,252.3 = 11.4%

Similarly with ROE, using equity instead of assets.

Now, some people use EBIT (earnings before interest and taxes) instead of net income. That might explain some differences between websites' data.

As for different numers between CAPS and Yahoo! Finance, anything that is price based (such as P/E, P/Sales, Dividend yield, etc.) on CAPS uses a "recent" price instead of the latest price. Thus, these ratios will differ between the two sites.

Hope this helps.

Cheers,
Jim

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Author: TMFGebinr Big gold star, 5000 posts Top Recommended Fools Old School Fool Supernova Phoenix 1
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Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/27/2008 9:50 PM
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I have taken a brief look at several 10Qs, I just haven't had time to actually sit down and read them through or figure out how to separate the relevant information. Thanks for the tip!

Hi Jognils,

In case you don't about it, this is the best place (imo) to get access to company SEC filings. Put the ticker symbol in and go to town. In the upper right of the resulting page, you can put in the number/name of a specific form and limit the results to just that (such as 10-K or 10-Q).

http://www.sec.gov/edgar/searchedgar/companysearch.html

Putting in ATVI in the box asking for a ticker and looking at the 10-Q filed 11-07-2007 (the one for the quarter ending 9-30-07), click the link, then click the top link of the long list that results and the 10-Q will open. Scroll down to the income statement (not too far) and look at the Operating Income (Loss) line for the "3 months ended September 30, 2007." You'll see that they lost money that quarter doing their normal thing. The very next line is the "Other Income" from Yahoo!'s website, but on this statement it has a different name. That tells you what other income came in to swing that loss to a slight positive for the quarter.

Once you find out what it is, you can check back in a couple of other 10-Qs and see whether this is "normal" or not.

Let us know what it is! :-)

Cheers,
Jim

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Author: TMFGebinr Big gold star, 5000 posts Top Recommended Fools Old School Fool Supernova Phoenix 1
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Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/27/2008 10:07 PM
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I look up more!..of the not stock graph related...stuff..(?)

I wish this could help...


Hi tobyas132,

Looking at reviews and ratings of current games is a good start and helps us think about sales of these games going into the future. Let me see if I can point you toward some other "non graph" type of research.

One place you might try looking is Yahoo! Finance (http://finance.yahoo.com/) and looking at the news from the company or that mentions the company.

Go to that website, put in the ticker symbol in the Get Quotes box (and click the button, of course), then click the Headlines link on the left.

The Motley Fool (hey!) had an article about Activision today. What was that all about?

Electronic Arts (EA) had some news on Monday from Investor's Business Daily. This is a competitor, so it helps to know a bit about them, too. What's this one about? Actually, there's a whole bunch of articles on Monday about the same subject (at least it seems so from the headlines). What's going on?

There's an article from last Friday called "Letting Gamers be Developers." What's that about? How do the new types of consoles, especially the Wii with it's motion-sensing wand (is that the right word?), change "the rules" in developing new games?


This kind of information gives a broader view of a company, its industry, and its competitors. It helps a lot for us to get a sense of how the company makes money and what issues it is up against both for the short term and the long term. Very important stuff to know. I mean if the existence of the PS3, Xbox, and Wii, or that special headphone (I don't know if that is cool or scary), changes the playing field, that's significant to the future of Activision, wouldn't you say?

Those are some ideas on where to start looking at the company from this view point. Let's see where you can take it. :-)

Cheers,
Jim

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Author: Jognils One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1999 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/27/2008 10:12 PM
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Hey TMFGebinr,

Thank you so much for answering my questions so well! That clears up a lot of confusion.

I figured that being a merchandising business, Activision would have a large seasonal sales fluctuation, so it makes sense that you would compare growth using annual or same-quarter figures. Apparently I just didn't carry my assumption through to that logical conclusion.

The whole Trailing Twelve Months calculation makes a lot more sense now. I think I was trying to take the average of the four quarters rather than adding them, which seems pretty dumb now. Rolling the quarters also seems logical so that you can always incorporate the most recent quarter.

Thanks for the ROA and ROE example! Surprisingly, I did remember to take the average total assets and stockholders' equity, so I think if I correct the TTM net income, I should get a lot more reasonable number than I was getting before.

Again, thanks for taking the time to explain these concepts!

Jognils

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Author: Jognils One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2000 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/27/2008 10:28 PM
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TMFGebinr,

Wow, what a great resource! Thanks for directing me to that website, and especially for the hints about where to find the information.

Here's what I found:
The "other income" for the quarter ending Sep. 30, 2007 consisted of investment income. When I scrolled further down, I found out that the net investment income came entirely from interest. There was also a section for realized capital gains on investments, but it was empty. Now correct me if I'm wrong, but it looks to me like Activision has probably invested in either bonds or dividend-bearing stocks. It might own stock in other companies, but it didn't buy or sell any shares that quarter. And I don't have time at the moment to keep looking, but my guess is that ATVI's specific investments are probably somewhere in the 10-Q as well, right?

Jognils

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Author: tobyas132 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2001 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/28/2008 5:24 PM
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Thanks TMFGebinr! I didnt know where to look up news(a.k.a headlines..) for activision but now I know so Ill be posting a research paper on "non-graph related stuff" tommorow!~

thx again!~

tobyas132

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Author: Razz037 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2002 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/28/2008 6:23 PM
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I use Yahoo finance a lot. I set up a “My Yahoo” page and have everything I want on one page – its cool! You can create your portfolio and watch list there and watch the action during market hours (20 minute delay).

I also use E*Trade.

Razz

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Author: ryuk One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2003 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/28/2008 7:27 PM
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Your right. America does like it a lot. I too have found out some information on games. IGN is the service provider I used. Here, I am good with graphs, but I am still going to use the ratings. I guess ATVI thought this game was good enough to sponser and they gave Guitar hero 3 and 8.9. So thats pretty good. ( 1.0 abysmal, 2.0 terrible, 3.0 bad,4.0 poor,5.0 mediocre,6.0 fair, 7.0 good,8.0 great,9.0 superb,10.0 perfect)Activision also seemed to be fond of Marvel:Ulitmate Alliance because they also gave that one a 9.5. They really are a good company guys. I'll keep on posting.

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Author: awesomestockdude Three stars, 500 posts Ticker Guide Supernova Odyssey 1
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Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/28/2008 11:09 PM
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I looked into the sales (revenue) and net income (earnings). Yahoo Finance gave me back from March 31, 2005 to March 31, 2007. They only divided the quarters up for the past year so I will have to look more for more past info on that. Reading quarterly reports is still somewhat tough for me but I am learning more every day.

From 2005 to 2006 their sales have risen about 1%. Their net income though, fell 70.9%. This means that they sold a little bit more, but lost most of their profit. I don't really know why they fell and I can't figure it out so if somebody could help be figure that out I would greatly appreciate it.

From 2006 to 2007 their sales still grew about 1% but their net income rose 113%. This means that they sold a little bit more than usual, but made double profit for their earnings. That was good for that year but from whatever happened in 2005, they are still below by 38.35%.

I hope I helped and explained enough. Correct me if I have something wrong and please share why they went down in 2005 and if we are out of whatever the problem was.

Best,

Awesomestockdude

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Author: Jognils One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2008 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/29/2008 8:55 PM
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Hi Awesomestockdude,

Thanks for pointing those statistics out! Yahoo Finance is good, but it can be frustrating when you can't get the time frame you want. I've been looking at the EDGAR website TMFGebinr showed me/us a few days ago (http://www.sec.gov/edgar/searchedgar/companysearch.html), and you can get a lot more complete information there if you're willing to sift through all the useless text in the quarterly (10-Q) and annual (10-K) forms.

I think I've found a reasonable cause for the 2006 drop in profits. There's probably more specific information I haven't found, but maybe we can find out together. If you follow the link and put in Activision's ticker symbol, it will pull up a list of results. Then in the "form type" box, type "10-k" to pull up only the annual reports. Find the form published June 9, 2006, then click the first document link on the following page. Got the form? Great!

Now scroll down to page 31, about a quarter of the way down (I never realized how long these reports can be!), which is a common-size income statement comparing 2004-2006. A common size statement has a column in terms of money like a regular income statement, but it also has a column that shows each item as a percent of sales or revenue, which can be helpful for year-to-year, or horizontal, analysis. Now our job is to figure out which item(s) grew faster than sales and took away from net income. Let us know what you find!

Jognils

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Author: Jognils One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2009 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 2/29/2008 9:29 PM
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Earlier I said...
It looks to me like Activision has probably invested in either bonds or dividend-bearing stocks... My guess is that ATVI's specific investments are probably somewhere in the 10-Q as well, right?

Sure enough, I found some information in Activision's 2007 10-K that shows all of its cash equivalents and short-term investments. Its short-term investments totaled $571,824,000 on March 31, the end of its 2007 fiscal year. Of that total, 34% was in U.S. agency issues (I'm guessing U.S. treasury bonds, but could someone verify that?), 18% was in corporate bonds (which would explain a lot of the interest income), and 4% was in certificates of deposit. There were other investments, but they didn't seem quite as relevant for our discussion. So that's where Activision is getting its investment income! Pretty interesting, huh?

Jognils

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Author: awesomestockdude Three stars, 500 posts Ticker Guide Supernova Odyssey 1
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Subject: Re: Stock of the Week: Activision (ATVI) Date: 3/1/2008 10:00 PM
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I found one thing that fell. It was the operating income. Here's a look at what happened within it.

Operating Income (Loss) by Segment:
  
                     2006                 2005                   2007   
  
Publishing          $(3,984)           $160,826               $93,223
  
Distribution         21,941             23,745                 16,594
  
Total operating 
income              $17,957            184,571                $109,817


Obviously you can tell what happened. While distribution stayed about the same, publishing fell a total of 
164,810.That made the total operating income drop 166,614. That alone, while everything else was about 
normal brought thetotal net income down a lot. I am not very sure how publishing would really effect the
stock or if I should really pay attention to it. If somebody would would clear up that I would appreciate it.

Best,

Awesomestockdude


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Author: Jognils One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2023 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 3/3/2008 8:49 PM
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Hey everyone,

Since the activity is slowing down here, I figured we could start wrapping up our first stock of the week. Awesomestockdude, I'm trying to find an answer for your question about the drop in publishing income, but someone else might be able to provide a more complete explanation.

Let's give it until Friday and then decide collectively whether we think Activision would make a good long-term investment. I have a little more research, which I'll try to post in the next day or so. If you would like to contribute more of your work and findings about Activision, now is the time to do it!

In the meantime, assuming everyone is in favor of continuing the stock of the week feature and willing to contribute, I can start a poll for next week's stock. I'll be sure to include the recommendations over the past week or so, including Bank of America, Wrigley's, and Berkshire Hathaway. Let me know if you have any other thoughts or ideas!

Jognils

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Author: awesomestockdude Three stars, 500 posts Ticker Guide Supernova Odyssey 1
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Subject: Re: Stock of the Week: Activision (ATVI) Date: 3/3/2008 10:39 PM
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Sorry that I haven't done that much on this stock. I've been having a ton of homework and barely any time to rest. I'll try to get some more information in if I have any time. Right now though, I have a few things on some ratios.

Quick Ratio- (2007) 3.8 (2006) 5.2
Current Ratio- (2007) 4.1 (2006) 5.8
Debt to equity- 0
Return on equity- 17.48%

The Quick Ratio shows how prepared a company might be to encounter unforseen difficulties or opportunities. Want a high number.
- The ratio isn't bad but it has fallen which is bad.

The Current Ratio provides an investor with a basic test of short term liquidity. Want a high ratio.
- Same as quick ratio. It's not bad but it has fallen.

The Debt to Equity Ratio compares how much equity the company has compared to its debt. Want a low ratio with 0 being perfect.
- The ratio is 0 which means that ATVI has no debt. GREAT!

The Return on Equity Ratio shows the amount of profit a business generates relative to the amount of money shareholders have put into it. 15% is good. 20% or above is excellent.
- It is 17.48% which is good.

That's what I have right now and if I have time I'll come back with more. I think, if people are still interested, that we should do ATVI again in a couple months. At the end of this month (March- 31) they end their fiscal year and we would have more accurate numbers and would be able to tell more. Tell me what you think.

Awesomestockdude

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Author: awesomestockdude Three stars, 500 posts Ticker Guide Supernova Odyssey 1
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Subject: Re: Stock of the Week: Activision (ATVI) Date: 3/4/2008 6:34 PM
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I was looking through the back of One Up On Wallstreet by Peter Lynch and noticed that he has a bunch of tips about what to pay attention to when buying a stock. Here are some that apply to Activision and that you may want to pay attention to.

- The company still has room to grow.
- Consider the size of the company if you expect it to profit from a specific product.
- Moderately fast growers in nongrowth industries make ideal investments.
- Look for companies with niches.
- Companies with no debt can't go bankrupt.
- Base your purchases off of the company's prospects, not off what the president says.
- Consider carefully the companies price to earnings ratio. If the stock is over valued and the company does well, the price won't show it.
- Insider buying is a positive sign, especialy when several individuals are buying at once.
- Be patient. Watch stocks never boil.
- When in doubt, tune in later.
- Invest at least as much time to picking a stock as you would be choosing a new tv.

Those are some important things to pay attention to when choosing if a stock is good or not. The company has room to grow if they come out with more good games and if people will buy them. The company will definitaly not go bankrupt and we need to pay attention to what the insiders do. Any more tips or questions? Time is running out.

Best,

Awesomestockdude

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Author: StealthFisher Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2030 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 3/4/2008 6:53 PM
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Hi ASD,

hit and run...at wk.

The company will definitaly not go bankrupt and we need to pay attention to what the insiders do


http://finance.yahoo.com/q/it?s=ATVI

Some insiders sell on a regular basis...just somethig to keep in mind if you do see selling. It keeps the SEC of their backs about insider selling.

J.P.

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Author: awesomestockdude Three stars, 500 posts Ticker Guide Supernova Odyssey 1
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Subject: Re: Stock of the Week: Activision (ATVI) Date: 3/4/2008 6:54 PM
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One thing we haven't hit yet with ATVI is their competition. Their main competition is Electronic Arts (ERTS) and they are neck in neck. They both come out with big games but ATVI is slowly passing up ERTS. I really don't know much about ATVI verses ERTS but it is one thing to pay attention to. I only want the stock that is at the top of its industry. This is one thing that could be a struggle for ATVI until they get way ahead, if they get way ahead.

One thing that really sticks out at me about ERTS is that (according to CAPS)its PE ratio is 679.11. That makes the stock look really overvalued. I would need to look way deeper into this stock before I even think about buying it. Just by looking at that, I am staying with ATVI whose PE ratio is 27.25.

ATVI has other competition but they don't compare to themselves and ERTS. This though, is definitaly something to look at.

Fool on,

Awesomestockdude

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Author: awesomestockdude Three stars, 500 posts Ticker Guide Supernova Odyssey 1
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Subject: Re: Stock of the Week: Activision (ATVI) Date: 3/4/2008 9:40 PM
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Jognils, another stock that we can add to the next poll is NVDA. It was suggested by Razz a while back. Didn't want to leave anything out.

Awesomestockdude

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Author: Jognils One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2033 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 3/5/2008 10:04 PM
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Hey Awesomestockdude,

Thanks for all the input! I know how frustrating it can be when you get loaded down with homework, but it sounds like you have your priorities straight!

You've got a good point with the comparison with EA. I'm what I guess you could call a "casual" gamer, so I don't really even know in many cases which games are made by Activision and which are made by Electronic Arts. As far as size and industry leadership, market cap is one way to compare the two. As of today, ATVI's market cap is $8.04 billion, and EA has a capitalization of $15.06 billion, so in that respect EA still has a pretty significant lead. On the other hand, like you said, EA could be vastly overvalued and could drop in the near future, and I guess you could also argue that the $7 billion gap is an opportunity for ATVI to continue to grow and capture a bigger portion of the market. That's how it looks to me, but someone please correct me if I'm using faulty logic.

Thanks for reminding me about NVDA! I'll make sure to put it in the poll.

Jognils

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Author: awesomestockdude Three stars, 500 posts Ticker Guide Supernova Odyssey 1
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Subject: Re: Stock of the Week: Activision (ATVI) Date: 3/8/2008 6:01 PM
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Guessing that we are done with ATVI, I will wrap it all up. The company surely is great but still has its own risk. It is second in its industry but with ERTS being extremly overvalued they may jump to the head in the future. It won't be soon but that means that they have a lot of space to grow. They have had several top selling games and one of their largest struggles will be to keep on coming out with games that people will buy.

In 2005 their net income fell a huge amount when sales came out a lot lower than expected, but if I remember correctly it was from the upgrading of game systems and people were waiting for the other games for the new systems to come out. They are quickly making up lost ground but they are still below what they were in 2005.

The company has no debt which is great. It's Return on Equity (ROE) is around 17% which isn't bad at all. They should be able to make it through any hard unforseeable times they may have without going under. They are definitaly making money off of their sales and are doing a better job of keeping cost low. They had an amazing fourth quarter and a pretty good year. I'm sure that in the future they will continue to do good unless some bad unforseen thing happens, which I think doesn't have much of a chance of happening. We will know more when their quater ends at the end of the month.
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That's what we all discovered from our research on ATVI. When we all work together we get more done so keep up the good work! I tried to keep it as simple as I could and if you have a question or want to add anything else in, feel free to do so.

Fool on,

Awesomestockdude

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Author: Jognils One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2061 of 2674
Subject: Re: Stock of the Week: Activision (ATVI) Date: 3/9/2008 6:24 PM
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Excellent summary awesomestockdude! Thanks for wrapping things up for us, and good work everyone!

Jognils

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