Why Activision Blizzard, Inc. (ATVI) Shares (Finally) Jumped

More shareholder return
Second, investors may be anticipating more cash from Activision. The company isn’t skittish about returning cash to shareholders. Since 2009, it has spent more than $3.6 billion on stock repurchases and dividends. But it looks like there may be even higher returns ahead. Activision raised its quarterly dividend by a penny last week, to $0.19 a share. But it also said this about plans for deploying its hefty operating cash flow: “The company is considering or may consider during 2013, substantial stock repurchases, dividends, acquisitions, licensing or other non-ordinary course transactions, and significant debt financings relating thereto.”

Sure, the potential for new loans isn’t usually cause for celebration. But Activision’s balance sheet is debt-free right now, while rivals like Electronic Arts Inc. (NASDAQ:EA) have taken advantage of low interest rates to bulk up on cash for acquisitions and other purposes. At today’s rates, it might make sense for Activision to take out some loans as it prepares to navigate the tricky move to the next generation of gaming consoles and devices.

Now what?
The rising development costs that will come with that transition is just one of the risks Activision faces this year. Softer-than-expected sales of Nintendo Co., Ltd (PINK:NTDOY)‘s Wii U system might end up crimping sales of Skylanders titles. And the big success of Diablo III last year will make for tough comparisons against 2012. Sure enough, the company has called for both revenue and profits to fall in 2013.

But that outlook doesn’t include any of the potential impact from Activision’s product pipeline. The next games on deck include a mix of brand-new intellectual property — like its collaboration with Bungie on a new gaming universe — and an extension of established brands, like Call of Duty Online in China.

Success with any of these titles could make for a surprisingly good year for Activision. And Wall Street might even notice.

The article Why Activision Shares (Finally) Jumped originally appeared on Fool.com and is written by Demitrios Kalogeropoulos.

Fool contributor Demitrios Kalogeropoulos owns shares of Walt Disney (NYSE:DIS) and Activision Blizzard. The Motley Fool recommends Activision Blizzard, Nintendo, and Walt Disney. The Motley Fool owns shares of Activision Blizzard and Walt Disney.

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