Earnings: 2Q profits of $0.06 vs. $0.053 consensus and $0.08 in 2Q09.

Revenue: Down 15% YoY to $683 million vs. prior guidance of $700 million.

“Besides a light release schedule, we believe the drop reflects weak consumer spending and a shift away from console games.  Although ATVI sold 1.5 million copies of StarCraft II in the first two days of its release, we do not think sales met expectations,” noted one analyst who maintained a Hold rating on shares.

Comment: Activision Blizzard Inc. (NASDAQ: ATVI) was unable to live up to the bar set by competitor Electronic Arts (NASDAQ: ERTS) earlier in the week.  ERTS, which reported on Tuesday, shot up approx. 8% following its quarterly release, increasing optimism that ATVI would report an equally compelling Q when it stepped up to the plate Thursday after the close.

ATVI managed a slight beat on EPS, but lights revs and even lighter guidance put pressure on shares almost immediately.  The company reiterated its FY10 views, but gave a weak 3Q10 forecast of $0.08/share on revenue of $725 million.  This was a far cry from expectations, as consensus estimates had ATVI’s 3Q pegged at $0.12/share on $912 million.  2Q Operating margins jumped to 31% from 21% as costs dropped 19%, but that was largely offset by income tax expenses that nearly quadrupled.

For 2Q, COO Tom Tippl noted that results were helped by strong sales of titles such as “World of Warcraft” and the “Call of Duty” franchise.  He added that, as a sign of the growing strength of Activision’s online digital business, Activision passed the 20 million-sales mark in downloadable map packs for the “Call of Duty” franchise.  ”This [was] the first quarter our sales from online channels outweighed our retail sales,” Chief Executive Bobby Kotick said on the conference call.

While it is certainly a plus to hear that ATVI’s downloads are thriving, that alone will not hold up shares while the industry at-large continues to suffer.  An NPD Group study found that total software sales dropped 12% last Q, and depending on your views of the domestic economy, those numbers may only be getting worse.

If you’re a believer in the ATVI franchise, shares’ post-earnings dip may be a good entry point, but until we see some solid numbers out of ATVI you may be better off looking elsewhere.

Disclosure: No holdings in ATVI.

The E3 2010 video game conference has been hot. Here is a quick recap video of the most exciting developments from Day 2 of the conference.

If you are interested in how the conference will affect video game stocks such as Activision (Nasdaq: ATVI), EA (Nasdaq: ERTS), Take-Two Interactive (Nasdaq: TTWO), Nintendo (NTDOY), Microsoft (Nasdaq: MSFT), and Sony (NYSE: SNE), click here to listen to my exclusive interview with gaming analyst Michael Pachter from Wedbush Morgan.

If you are interested in detailed entry and exit plans for low risk-high reward stocks which meet our proprietary standards, click here for a free trial to our Wall St. Cheat Sheet Premium newsletter written by the Hoffman Brothers.

On a day when both economic news and trading volume are light, you must look for near-term indicators to trade this market. I’ve put together a Cheat Sheet of interesting facts to keep in mind as these markets chart their course ahead:

7) The World Cup: ESPN and ABC (NYSE:DIS) are projecting an average of 400 million soccer fans will watch each of the 64 games that it will televise during the 2010 World Cup. Only 106.5 million people watched the Super Bowl in February 2010, an all-time record for NFL football (source: ESPN, Nielsen).

6) Company News: Best Buy (NYSE:BBY), FedEx (NYSE:FDX), Discover Financial (NYSE:DFS) and Kroger (NYSE:KR) share their earnings reports this week and provide a preview to 2nd quarter earnings slated to begin on July 12th.

5) The E3 Conference: As Michael Pachter says, hardware will be the theme. Sony (NYSE:SNE), Activision (NASDAQ:ATVI), and Microsoft’s Natal (NASDAQ:MSFT) will be the attention grabbers.

4) Summertime Stocks: The 3 summer months (June/July/August) have produced an average total return loss of 0.4% for the S&P 500 stock index over the last 20 years (1990-2009).  Yet, the stock index was up +11.7% during the 3 summer months in 2009.  Through the end of May 2010, the S&P 500 was down 1.5% YTD on a total return basis (source: BTN Research).

3) 2nd Quarter Earnings Expectations: The actual profits of the companies in the S&P 500 during the 2nd quarter 2010 are projected to be +14% higher than they were during the 2nd quarter 2009 (source: S&P).

2) Treasuries: The yield on the 10-year Treasury note closed last Friday (6/11/10) at 3.23%.  20 years ago today (6/14/90), the yield was 8.38% (source: Treasury Department).

1) Upside or Downside: Since 1950, economic expansions have lasted 6 times as long as economic contractions.  Economic expansions are defined as “trough to peak” periods and economic contractions are defined as “peak to trough” periods.  The average expansion has lasted 62 months while the average contraction has lasted 10 months (source: National Bureau of Economic Research).

Disclosure: Author is long MSFT; no positions in the other companies mentioned

If you are interested in detailed entry and exit plans for low risk-high reward stocks which meet our proprietary standards, click here for a free trial to our Wall St. Cheat Sheet Premium newsletter written by the Hoffman Brothers.

The internet is buzzing with tweets and emails about the release of the Resurgence pack for Activision’s (Nasdaq: ATVI) Call of Duty: Modern Warfare 2. The white hot franchise game is available on Microsoft’s (Nasdaq: MSFT) Xbox Live.

These “packs” or updates have become standard operating procedure for gaming companies. Although the model is not yet solid because gamers expect everything for free, gaming analyst Michael Pachter at Wedbush Morgan says these packs will soon find a price point for their added value.

The news has kept Activision’s stock positive today. Stay tuned next week for our E3 gaming conference preview …

Activision Blizzard Inc (ATVI) surpassed quarterly expectations with a very positive report yesterday evening. CEO Bobby Kotick said popular game franchises, such as “Call of Duty” and “World of Warcraft,” contributed to the company’s 2010 success.

ATVI earned $381 million, or $.30 cents per share, up from $189 million, or $.14 cents a share, a year earlier. That’s over a 100% year-over-year quarterly earnings increase!

Revenue rose 33 percent to $1.31 billion. ATVI said revenue was driven primarily by sales of “Call of Duty: Modern Warfare 2″ and “World of Warcraft.”

ATVI has four big upcoming releases on deck for the quarter, which include a complement to the movies “Shrek Forever After” and “Transformers: War For Cybertron.” This quarter also will also release two new games with massive potential: a racing game “Blur” and an action game called “Singularity.”

For the full year, Activision said it now expects earnings of $.72 cents per share compared with its previous forecast of $.70 cents per share. Thus, ATVI raised its profit outlook for the full year.

Later in the year, the company plans to launch new versions of its “Guitar Hero” and “DJ Hero” franchises, as well as new titles for “James Bond,” Spiderman” and “Tony Hawk.” The next “Call of Duty” title called “Black Ops” will come out in November.

Disclosure: No positions in the companies mentioned

To get entry points, stop-loss points, and profit targets for my May watch list stocks and Featured Trade, simply try a 14-day complimentary trial by visiting here: Wall St. Cheat Sheet Premium

Activision’s (Nasdaq: ATVI) Call of Duty Modern Warfare 2 has sold an estimated $550 million in the first five days of its release, crushing industry records.

Referring to sales of the Call of Duty franchise, “It is likely to be one of the most viewed of all entertainment experiences in modern history,” says Robert Kotick, CEO of Activision.

Putting the success of the Call of Duty franchise into perspective, the movie “The Twilight Saga: New Moon” leads at the box office for the second weekend in a row with ten day total ticket sales of $230.7 million. Call of Duty Modern Warfare’s sales have double the movie box office’s best movie sales in half the amount of time.

Even though the Call of Duty franchise success is just one specific example of people choosing video games over movie theaters with their entertainment wallet, there are plenty of other examples (i.e. Rockband, Madden, etc).

With the emergence of the flat screen TV home theater, it seems the American family continues to remain more comfortable than ever at home these days.

Disclosure: No positions in the stocks mentioned.

Readers who liked this also enjoyed these posts:

The Best Argument for Gold

Market Profile Helps Us Trade Around Massive Events Like Dubai Default

StocksRetailATVIGMEERTSTHQI