Activision Sheds 800 Jobs Amid Record Sales, Earnings

Activision Sheds 800 Jobs Amid Record Sales, Earnings

Video game maker Activision Blizzard on a Feb. 12 earnings call with analysts confirmed rumors of big job cuts – rumors first floated last week in a Bloomberg report.

Executives on the call revealed plans to slash 8% of the company’s 9,600-employee workforce, despite “record” sales of $7.5 billion in 2018, up from $7.02 billion in 2017. Earnings per share, too, were a record $2.35, compared with $0.36 in 2017.

In an earnings release issued earlier in the day, CEO Bobby Kotick said that “while our financial results for 2018 were the best in our history, we didn’t realize our full potential. To help us reach our full potential, we have made a number of important leadership changes. These changes should enable us to achieve the many opportunities our industry affords us, especially with our powerful owned franchises, our strong commercial capabilities, our direct digital connections to hundreds of millions of players, and our extraordinarily talented employees.”

But on the afternoon earnings call, COO Coddy Johnson revealed some 800 of those employees would soon be gone, mostly in non-developmental roles.

“Our restructuring plan sheds investment and less productive non-strategic areas of our business and will result in a net headcount reduction of approximately 8% while also driving a significant increase in investment, focus and capabilities around our biggest franchises,” he said on the call, according to a transcript provided by Seeking Alpha.

The publisher began notifying those who are being laid off across its various divisions, which include Activision, Blizzard and King.

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At the same time, Activision promised a 20% spike in the number of developers working on marquee game franchises such as Call of Duty, CandyCrush, Overwatch,  WarcraftHearthstone and Diablo over the course of 2019.

“We have worked with our new business unit leaders to undertake a comprehensive examination of our business to determine the changes we need to make to improve execution and capitalize on the substantial long-term growth opportunities for our company,” Johnson said on the call. “We determined that we need to refocus our best resources on our biggest opportunities and to remove an unnecessary level of complexity and duplication that is built up in certain parts of the business.

“We have, therefore, developed a clear plan for this year to refocus and reinforce the foundation for growth. This refocus includes initiatives developed by our new business unit leaders, each of whom has demonstrated the ability to combine creative excellence with the commercial focus on profitable growth.

“First, we are investing more in development for our biggest internally owned franchises across upfront releases, in-game content, mobile and geographic expansion. Second, we are deprioritizing initiatives that are not meeting our expectations and reducing certain non-development and administrative-related costs across our business. Third, we are integrating our global and regional sales and go-to-market partnerships and sponsorships capabilities across the business, enabling us to better leverage talent, expertise and scale on behalf of our business units.”

For the year ended Dec. 31, 2018, Activision Blizzard’s net revenues from digital channels were a record $5.79 billion.

For the quarter ended Dec. 31, 2018, Activision Blizzard’s net revenues were a record $2.38 billion, up from $2.04 billion for the fourth quarter of 2017. Net revenues from digital channels were a record $1.79 billion. Earnings per diluted share were a record $0.84, as compared with loss per share of $0.77 for the fourth quarter of 2017.

Activision Blizzard generated $1.79 billion in operating cash flow for the year ended Dec. 31, 2018, as compared to $2.21 billion for 2017.

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