Activision Blizzard said it would cut about 8% of its workforce, or at least 720 jobs, as part of a restructuring plan. The announcement came as the company reported financial results that showed revenue lagging Wall Street estimates.
Activision said its revenue in the last three months of 2018 rose 7.6% to $2.8 billion, missing the consensus of Wall Street forecasts by $200 million. Earnings per share of 84 cents beat estimates by 27 cents.
The company also warned that revenue and earnings in 2019 would come in below analysts’ forecasts. The gaming giant expects to see revenue of $6.30 billion and a net profit of $2.10 per share. Analysts had been projecting revenue of $7.25 billion this year and a net income of $2.54 per share.
Activision’s business is in the hit-driven and often volatile market of video games. In a statement, the company announced that it would be shifting resources toward better-performing titles and away from areas that aren’t pulling their corporate weight.
“The number of developers working on Call of Duty, Candy Crush, Overwatch, Warcraft, Hearthstone and Diablo in aggregate will increase approximately 20% over the course of 2019,” Activision said in its earnings release. “The company 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.”
On a conference call discussing earnings, CEO Bobby Kotick specified that the restructuring plan would leave Activision’s workforce 8% smaller. The company’s web site says it staffs “9000+ employees.” Reducing that workforce by 8% would entail a net loss of at least 720 jobs.
“Our restructuring plan sheds investment and less productive nonstrategic areas to our business and will result in a net headcount reduction of approximately 8 percent while also driving a significant increase in investment focus and capabilities around our biggest franchises,” Kotick said, according to CNBC. “We’re confident that over time this plan will enable our teams to accelerate the delivery of high-quality content to our communities.”
Activision’s stock initially fell 3.8% in after-hours trading on the earnings report. Once the layoffs were announced, the stock rebounded to as much as 4.8% above its official closing price of $41.67 a share.
Last week, Bloomberg reported that Activision was planning hundreds of job cuts as games like Overwatch and Hearthstone “were seeing flat or declining numbers of users.” Last year, its previous CEO, Eric Hirshberg, left the company after eight years at the helm. In January, Activision re-appointed Dennis Durkin as CFO after firing then-CFO Spencer Neumann “for cause.”