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Activision Blizzard To Eliminate About 8% Of Its Workforce

Activision Blizzard Inc. (ATVI) plans to eliminate about 8% of its workforce. The cuts will eliminate around 775 people from Activision Blizzard's workforce of about 9,800.

"Our restructuring plan sheds investment and less productive nonstrategic areas to 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," Chief Operating Officer Coddy Johnson said in the conference call.

Bobby Kotick, Chief Executive Officer of Activision Blizzard said "While our financial results for 2018 were the best in our history, we didn't realize our full potential......"

In 2019, the company will increase development investment in its biggest franchises, enabling teams to accelerate the pace and quality of content for their communities and supporting a number of new product initiatives. The number of developers working on Call of Duty, CandyCrush, Overwatch, Warcraft, Hearthstone and Diablo in aggregate will increase approximately 20% over the course of 2019, the company said.

The company noted that it will fund this greater investment by de-prioritizing initiatives that are not meeting expectations and reducing certain non-development and administrative-related costs across the business. The company is also integrating its global and regional sales and go-to-market, partnerships, and sponsorships capabilities. As part of these restructuring actions, the company expects to incur a GAAP-only pre-tax charge of approximately $150 million, the majority of which is expected to be incurred this year.

Net bookings are expected to be $6.30 billion for 2019 and $1.18 billion for the first quarter of 2019.

For the first-quarter, the company expects earnings per share to be $0.39, Non-GAAP earnings per share of $0.63, and net revenues of $1.715 billion. Analysts polled by Thomson Reuters expect the company to report earnings of $0.46 per share and revenues of $1.46 billion for the first-quarter. Analysts' estimates typically exclude special items.

For the fiscal year 2019, the company expects earnings per share to be $1.18, Non-GAAP earnings per share of $1.85,and net revenues of $6.025 billion. Wall Street currently is looking for fiscal year 2019 earnings of $2.58 per share on annual revenues of $7.30 billion.

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