Activision posts better-than-expected earnings

Activision affirmed its full year outlook of $4.9 billion in operating revenues and $1.2 billion in operating income, and its shares climbed more than 10 percent after-hours.
The company, which goes head-to-head with Electronic Arts Inc (ERTS.O) for the title of biggest publisher, voiced its optimism that titles like "Call of Duty 4" will sell well this holiday season, even in the face of the tough economy.
"It is an uncertain time, and it is unclear as to whether or not the consumer is going to materialize for the holiday the way that any of us would like, so we do still have to have caution about the balance of the holiday selling season," Chief Executive Bobby Kotick said on a conference call.
The report came in sharp contrast to that of smaller rival THQ Inc (THQI.O) , which posted a wider than expected second quarter loss on weak international sales of its "WALL-E" game, and said it would shut game development studios and cut staff.
Activision also was more confident about consumer sentiment than EA, which last week cut its full year earnings outlook and announced plans to reduce staff, citing a need to trim costs as the global economic crisis grips consumers.
"Look at the results from Electronic Arts, and THQ, and look at how well Activision is holding up. They are doing phenomenally better than any of their peers," said Signal Hill Group analyst Todd Greenwald. "The have the best lineup for this holiday."
Excluding special items, Activision reported a profit of 7 cents a share, beating Wall Street estimates of 5 cents a share, according to Reuters Estimates.
The results were Activision's first since it closed its merger with Blizzard, the games unit of France's Vivendi SA, which makes the "World of Warcraft" game.
On a net basis the company reported a loss of $108 million, or 8 cents a share, versus a profit of $48 million, or 8 cents a share, one year ago.
On a conference call with analysts, Chief Executive Bobby Kotick said that its holiday line of games "seems to be the strongest in our industry."
Activision said it expects fourth quarter operating revenue of $2.2 billion, and a operating profit of 29 cents a share. The forecast falls slightly short of analysts view of revenue $2.3 billion in revenue and a profit of 34 cents a share, according to Reuters Estimates.
THQ, in an effort to "position THQ for future profitability and growth" said it would focus on fewer, higher quality titles, cut costs accordingly.
It plans to cancel several game titles in development, close five studios and reduce its product development personnel by about 250 people, or 17 percent of its studio staff.
The company has reduced its fiscal 2010 forecasted annual product development spending by about $100 million, it said.
Shares of Activision rose to $12.14 from a Nasdaq close of $10.98. THQ shares fell to $5.49 after closing at $6.55.
(Reporting by Franklin Paul; editing by Carol Bishopric)
Article Source: www.reuters.com.