* Sees 2009 EPS 61 cents vs Street view 67 cents
* Q4 EPS ex-items 31 cents vs Street view 29 cents
* Q4 adj revenue $2.34 bln vs Street view $2.15 bln
* Shares fall 5 pct after hours (Adds comments from analysts, conference call)
SAN FRANCISCO, Feb 11 Video game publisher Activision Blizzard Inc (ATVI.O) forecast 2009 earnings to fall far short of Wall Street expectations as consumers trimmed spending and retailers avoided overstocking, sending its shares down 5 percent in extended trading on Wednesday.
That weak outlook overshadowed Activision's better-than-expected quarterly earnings, driven by strong sales of its "Guitar Hero" and "Call of Duty" franchises.
But analysts including Wedbush Morgan's Michael Pachter say Activision, which acquired "World of Warcraft" developers Blizzard in 2008, was being overly cautious in its company outlook and in forecasting on Wednesday just mid-single digit growth in the addressable video game market.
Experts expect the video game industry to prove more resilient in the midst of recession as consumers "cocoon" or choose less expensive ways to spend leisure time, but game publishers have nonetheless been hurt as retailers try not to overstock stores. [ID:nN03534775]
"Overall it was just a more conservative approach, we think their core business is still performing great," Pacific Growth Equities analyst Leo Choi said.
This month, rival Electronic Arts Inc ERTS.O posted weaker-than-expected results and forecast a loss for the current fiscal year, while THQ Inc THQI.O swung to a loss and announced spending and job cuts. Take Two Interactive Software (TTWO.O) reports next month.
Activision forecast profit excluding one-time items at 61 cents a share for 2009, on revenue of $4.7 billion. The revenue forecast included a negative impact of $400 million from a stronger dollar and a reduction of $200 million from its lower-margin distribution and co-publishing businesses.
The average analyst estimate was for full-year earnings of 67 cents a share on revenue of $5.17 billion, according to Reuters Estimates.
Activision's first-quarter forecasts also missed Wall Street expectations. The company estimated earnings excluding items of 3 cents per share, against the average analyst forecast for a profit of 11 cents per share.
Yet, as rivals cut jobs and shrunk their pipeline of new titles, Chief Executive Robert Kotick said Activision would not resort to "wholesale layoffs" in 2009.
"We won't be distracted by layoffs and restructuring and things that other companies are going to be distracted with," Kotick told Reuters in an interview.
"We don't respond to managing our operating expenses because there's a financial crisis, we do it all the time."
Activision was formed through the merger of Activision with Blizzard, the former games unit of France's Vivendi SA, in a deal that closed last July.
Overall video game sales seemed to be holding up relatively well in a difficult economy. According to research from NPD, combined video game software unit sales across the world's three largest games markets -- the United States, the United Kingdom and Japan - grew 11 percent in 2008.
But Activision reported a net loss in its fourth quarter of $72 million, or 5 cents a share. Excluding items, it posted a profit of 31 cents a share, beating the average analyst forecast for 29 cents a share, according to Reuters Estimates.
Revenue in the quarter was $2.3 billion -- above its previous forecast -- and topped the $2.15 billion Wall Street estimated.
Activision's "Guitar Hero World Tour" and "Call of Duty: World at War" games were the No. 1 and No. 2 console games, respectively, in North America and Europe in the fourth quarter, according to research house NPD.
In addition, its "World of Warcraft" was the top-selling PC game in those regions in 2008.
Kotick told analysts on the company's conference call that the video game market's "fundamentals are positive" and said he was confident the company would launch "more products than ever before" in 2009.
It plans to release two titles in the March quarter: "Guitar Hero Metallica" and "Monsters vs. Aliens."
Activision's shares have dived more than 40 percent over the past six months, although the company's stock has fared much better than rivals'. EA's stock is down more than 60 percent.