Activision profit up on "Kung Fu," "Guitar Hero"

Business Materials 1 August 2008 09:09 (UTC +04:00)

Video game publisher Activision Blizzard Inc said quarterly profit at its Activision unit more than doubled on sales of "Kung Fu Panda" and "Guitar Hero: On Tour," and it raised its 2009 forecast for the newly merged company, Reuters reported.

The company's best-selling "Guitar Hero" franchise, where players pound out tunes on a guitar-shaped controller, continued to drive sales.

"Guitar Hero: On Tour" for Nintendo Co Ltd's DS platform ranked as the second-best-selling game in the United States in June and the franchise remained the best-selling franchise in the country for the first half of 2008, according to market researcher NPD.

Activision earlier this month closed its merger with Blizzard, the games unit of France's Vivendi SA, which makes the popular "World of Warcraft" game. That puts it head to head with Electronic Arts Inc in the battle for the title of biggest video game publisher.

Santa Monica, California-based Activision Blizzard raised its 2009 operating profit forecast to $1.2 billion from $1.1 billion, but some on Wall Street had expected more, and shares dipped slightly in after-hours trading.

"Their guidance is quite conservative and we think that number could be almost 15 percent higher than that," said Sterne, Agee & Leach analyst Arvind Bhatia.

Excluding results from Blizzard, Activision said net income in the June-ending quarter rose to $59 million, or 18 cents per share, from $27.8 million, or 9 cents per share, in the same period a year ago.

Not including compensation and merger costs, Activision had a profit of 23 cents per share. On that basis, it topped Wall Street expectations by a penny, according to Reuters Estimates.

Revenue rose 32 percent to $654.2 million, beating the average Wall Street expectation of $651.4 million.

For the current quarter, Activision Blizzard expects revenues of $636 million. The outlook excludes $50 million in sales while Activision was an independent company from July 1 through July 9.

The company forecast a net loss of 26 cents per share, and a profit of 8 cents per share, excluding items.

For the December quarter, Activision Blizzard expects net income of 11 cents per share on revenue of $1.85 billion. Excluding charges, the company sees quarterly earnings of 64 cents per share.

Activision Blizzard's rock-solid holiday game line-up includes the latest Guitar Hero and James Bond games. Blizzard will also release this year "Wrath of the Lich King," the latest edition of "World of Warcraft," which is played by nearly 11 million.

"They have the best products out there," said Janco Partners analyst Mike Hickey. "When you have the best products in a hot market you can sleep well at night.

Shares in Activision Blizzard slipped about 2 percent to $35.25 in extended trade from its Nasdaq close of $35.98.