STOCK VALUATION PROJECT Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

STOCK VALUATION PROJECT Case Solution

BUSINESS DESCRIPTION

Activision Blizzard Inc. is one of the largest interactive and gaming companies in the world. Its headquarter is in Santa Monica, California. In 2008, Activision merged with Vivendi games and thus, Activision Blizzard was born. The combined powers have resulted in a number of hit gaming franchises, Activision also own other famous gaming studios such as Treyarch, infinity ward the studios also along with Activision blizzard produced famous games for consoles, desktop PCs, and other platforms. One of the game it produced “Call of duty” is now a #1 console game globally and has been the #1 franchise globally in a row for the past seven years. Activision also produced several other games like War Craft, Destiny, and Candy Crush.

Activision Blizzard ended 2015 with $4.5 billion in revenues. The overall market for interactive gaming is also growing at 13% annually; there is strong growth in the market in which Activision Blizzard operates. One of the huge milestones for Activision Blizzard was that they joined S&P 500 on August 28, 2015, becoming one of the only three companies on the list related to gaming alongside Microsoft and Electronic Arts. They are now more diversified than they were year ago. Now they are exploiting new opportunities in mobile gaming market they also made their move in form of King’s acquisition, a leading interactive entertainment company in the mobile world. They have also decided to increase dividend from $0.23 to $0.26 in year 2016. As of 31 December 2015, they had approximately 734 million shares of common stock issued and outstanding. The company has assets of approximately $15.2 billion with a work force of 6690 employees. The company is technologically very advanced and adopts new trends very effectively to maintain its competitive edge on other competitors.

INDUSTRY OVERVIEW & COMPETITIVE POSITION

Today, the video game industry is a developing industry and showing growth every year. The industry is not isolated with its boundary and is a long way from its maturity because every day, there is an advancement in the technology, software, markets, and industry is expanding constantly. Innovation is key in this industry because customers and gamers always like something new and trendy and Activision Blizzard is satisfying its customer base, which is evident from the fact that its games are pre booked, even before their releases. The industry is far away from its saturation point, international video game revenue is estimated to be $81.5B in 2014. This is more than double the revenue of the international film industry in 2013.

Companies like Activision blizzard, Microsoft, take two interactive, EA games are very popular among gamers. One of the key characteristics of this gaming interactive and entertainment industry is that all companies almost share all gamers, this is because gamers play all games, its not like each companies has its own customer base. That is why there are a lot of opportunities and even any new company with its new game can effect market in a way like other big giants are dominating their market shares. Activision Blizzard is demonstrating exceptional performance and paying out dividends to its shareholders, very few gaming companies distribute their profits to shareholders in form of dividends. Activision Blizzard is now pursuing an aggressive growth strategy by acquiring a number of different companies in new markets and divisions of gaming and interactive entertainment industry like acquiring King Digital Entertainment plc, a leading company in mobile gaming market. One of the many reasons why Activision Blizzard Inc is performing really well is that the executives have concentrated equity included in their salary package along with other stock based compensation, restricted stocks, and performance shares. ...............

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