UPDATE 2-Activision raises 2009 outlook, shares climb

* Q1 EPS ex-items 8 cents, beats Street view 5 cents

* Q1 non-GAAP revenue $724 mln, beats Street view $594 mln

* Raises 2009 EPS ex-items forecast by 2 cents to 63 cents

* Shares up 2.7 pct (Adds analyst comment, details from conference call)

By Gabriel Madway

SAN FRANCISCO, May 7 (Reuters) - Activision Blizzard Inc (ATVI.O) posted quarterly results that trumped Wall Street estimates, and raised its 2009 forecast on what the video game publisher called its strongest slate of upcoming titles.

The publisher of the "Guitar Hero" and "Call of Duty" franchises, whose shares rose 2.7 percent after the results, said it will continue to focus on proven big-name titles and it is planning 11 major releases in the second half of 2009.

"The base business is stable and the new business growth is offsetting base business decline, if there is any," said Wedbush Morgan analyst Michael Pachter.

Some analysts fear growth in the hugely popular "Guitar Hero" game, which passed the $2 billion sales mark in the first quarter, will start to fade. But Pachter said those fears are overblown, expecting "Guitar Hero" to be at minimum a $600 million a year business for at least the next five years.

"They're a victim of their own success. The better they do the farther there is to fall," he said.

Activision raised its forecast for full-year earnings per share, excluding items, by 2 cents to 63 cents a share, and boosted its non-GAAP revenue forecast by $100 million to $4.8 billion. Wall Street was expecting earnings of 64 cents per share on revenue of $4.77 billion.

Chief Executive Robert Kotick told Reuters in an interview he continues to be cautiously optimistic about growth prospects for the video game industry.

"The confidence we have in raising our outlook for the year is really coming from more visibility on the back-half titles," he said. "You listen to some of our competitors and they're still struggling with what's going to work for consumers, and when you look at our lineup, it's by far the best lineup we've ever had."

HIGH HOPES

Kotick said Activision has high hopes for forthcoming titles such as "Call of Duty: Modern Warfare 2," "DJ Hero" and "Band Hero."

The company was formed through the merger of Activision with "World of Warcraft" developer Blizzard, the former games unit of France's Vivendi SA (VIV.PA), in a deal that closed last July.