February 7, 2008 / 9:44 PM / in 10 years

UPDATE 1-Activision profit soars on "Guitar Hero" power

(Adds forecasts, analyst estimates, share price)

SAN FRANCISCO, Feb 7 (Reuters) - Activision Inc (ATVI.O) posted a higher-than-expected quarterly net profit on Thursday, driven by strong sales of popular video games like “Guitar Hero 3” and “Call of Duty 4”.

Activision also gave a revenue forecast for its current, fiscal fourth quarter of $350 million, 25 percent above the average Wall Street forecast of about $280 million on Reuters Estimates.

The fourth-quarter profit forecast of 4 cents per share after special items was in line with Wall Street estimates.

“The videogame market growth exceeded even our own forecasts, and we believe this momentum will continue over the coming years,” Chief Executive Bobby Kotick said in a statement.

In its third quarter ended Dec. 31, Activision’s net income was $272.2 million, or 86 cents per share, compared with $142.8 million, or 46 cents per share, a year earlier.

Excluding special items such as stock-based compensation, Activision said it earned 90 cents per share, more than the 81 cents expected by analysts.

    Revenue soared 80 percent to $1.48 billion and beat the average forecast of $1.39 billion.

    Shares in Activision rose 11 cents to $26.40 in extended trading. The stock has soared 55 percent over the past year, compared with a fall of 11 percent in both Electronic Arts Inc ERTS.O and Take-Two Interactive Software Inc (TTWO.O).

    Activision is set to merge with the games unit of French media and telecoms giant Vivendi (VIV.PA), creating a company that will challenge EA for the top spot in the industry. (Reporting by Scott Hillis; Editing by Braden Reddall)

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