More Activision Blizzard and Vivendi news, and a Warning from the CFA Institute

More Vivendi and Activision Blizzard news

I thought this article was interesting, mainly because I have never thought of this possibility.  The article talks about how Activision Blizzard could buy its own shares back from Vivendi, instead of Vivendi spinning off or selling ATVI to a third-party.  It speculates that because Vivendi is having trouble selling Activision, and since ATVI has about $3 billion in cash and almost no debt that they could finance the rest of the transaction.

To me this makes zero sense from both companies perspectives.

  • For Vivendi they would most likely not get the premium on the shares that they are looking for, meaning they would not be able to pay down their debt to the levels they would want.
  • For Activision this would mean they would lower their cash hoard, and have to leverage up their balance sheet just to make the transaction happen.  Seems like a loser to me on all accounts.

I am interested to see if anyone has any differing thoughts on this possibility.

Here is an overview of the gaming industry and the profitability of each company.

Three things surprised me about this graphic: 1) That Gamestop is making as much money as they are.  2) That ATVI was behind Nintendo, Namco Bandai, Sega, and only slightly ahead of EA in terms of profits. 3) That Zynga is making over $1 billion in profits.  Most of their games are free to play on Facebook aren’t they?  I do not know much about Zynga, I have never played any of its games, and only heard of a couple of them, so if anyone else has information on them could you please let me know.

A Warning from the CFA Institute

This article talks about decision making errors that could be hurting your investment performance and talks about five active thinking strategies.  Some pretty interesting thoughts.

My next post will be a mini review of Valuation: Measuring and Managing the Value of Companies