Earlier this month, we reported that Activision Blizzard parent Vivendi was set to make a move that would pay down its debt from the Call of Duty publisher's coffers. The action would help pay down a small part of significant debt.

As we mentioned in May, Activision has typically used a risk-averse investment profile. The publisher has largely stayed away from mobile, choosing instead to back a smaller number of properties with growth potential.

This generation saw the rise of Call of Duty as the biggest franchise in gaming, and the past three years have been enormous for the younger market (and their parents) with Toys for Bob's Skylanders series. Licensed titles, including Transformers: War for Cybertron and Deadpool, fit the profile due to high fan interest.

Because of the more cautious approach, Activision has fared better in the recent industry disruption than many others, including its biggest rival, Electronic Arts. Activision most recently reported over $4 billion in cash, but some of that is held outside the country. Were it to come back inside the United States, the funds would be subject to taxes.

Activision doesn't have the funds locally that Vivendi's special dividend would require (approximately $3 billion, $2 billion of which would go to the parent firm). This would require new debt, a situation that Activision CEO Bobby Kotick has been working to avoid.

The Wall Street Journal report also mentions that Kotick has been trying to use his company's cash to buy Vivendi out, though this has been disputed by other sources mentioned in the piece.

We've reached out to Activision for comment.

[Source: Wall Street Journal]

Our Take

This probably goes without saying, but the situation isn't good for Activision. A dividend would drain the company of an enormous amount of stockpiled cash meant to weather a difficult 2013 fiscal year.

Console transition years are hard, and even with Call of Duty: Ghosts coming, cross-generational development means added expenditure (even if solely developing for next-generation isn't anticipated to increase costs).

If anyone can recover from a sudden cash drain like this, it's Bobby Kotick. He's proven that in tough times, it's possible to operate a business without laying off a significant number of employees.

I expect that this is the reason we don't have a scheduled date for Activision's second quarter earnings call. These presentations provide forward-looking guidance for investors. If Vivendi makes its move, it would likely necessitate a drastic shift in planning and execution moving ahead.