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UPDATE 2-Activision results top Street, shares up

* Q1 EPS ex-items 9 cts vs Street view 4 cts

* Q1 non-GAAP rev $714 mln vs Street view $569.7 mln

* Q2 outlook below Street, maintains 2010 forecast

* Shares up 3 pct (Adds share movement, background, byline)

By Gabriel Madway

SAN FRANCISCO, May 6 (Reuters) - Activision Blizzard Inc ATVI.O reported better-than-expected results, led by its twin blockbusters "Call of Duty" and "World of Warcraft," and its shares rose 3 percent after hours.

Activision offered a conservative outlook for the current quarter and kept its 2010 outlook in place, but that failed to deter investors well-accustomed to the game publisher’s typically cautious approach.

Activision, the world’s largest stand-alone video game publisher by market value, soldiered through the economic downturn in better shape than rivals -- which were bloated with costs -- boosted by a handful of titles, particularly “Call of Duty,” one of the best-selling games of all time.

But Activision’s stock has turned in a lackluster performance so far in 2010, falling around 4 percent, as chiefs at its Infinity Ward studio, which created “Call of Duty,” were fired in March for alleged misconduct, and the two sides have sued one another.

The former executives have formed a new studio, hired away a large number of Infinity Ward employees, and inked an exclusive deal with rival Electronic Arts Inc ERTS.O.

Janco Partners analyst Mike Hickey said investors were hoping for more details on how the exodus at Infinity Ward impacted plans for games in the “Call of Duty” franchise.

“I think the earnings were good mainly, but I think the major disappointment is the lack of clarity on the Infinity Ward situation,” Hickey said.

On a conference call with analysts, Activision Chief Executive Bobby Kotick downplayed the drama, saying the company remains “the destination for the top talent in the video game industry.”

In an interview, Kotick said he was confident that the company’s holiday games would measure up favorably with last year’s slate, but he again offered a cautious take on the consumer.

“While there might be some signs of life ... I would not be enthusiastic about material changes to the upside of economies in any (part) of the developed world,” Kotick said.

In the current quarter, Activision plans to release the racing game “Blur” and the shooter game “Singularity.” Activision said earlier in the week that its much-anticipated “StarCraft II” title will be launched in the third quarter.

PROFIT, REVENUE SURGE

Activision posted net earnings of $381 million, or 30 cents a share, for the first quarter ended March 31, double the $189 million, or 14 cents a share, in the year-ago period.

Excluding items, the “Guitar Hero” publisher earned 9 cents a share, better than the 4-cent consensus estimate of analysts surveyed by Thomson Reuters I/B/E/S.

The company said last month its results were tracking better than it had anticipated. [ID:nN15208489]

Revenue rose 33 percent to $1.3 billion. Non-GAAP revenue, which excludes deferred revenue, totaled $714 million, well above Wall Street’s target of $569.7 million.

Activision typically issues conservative guidance. The company forecast current quarter earnings, excluding items, of 4 cents a share on non-GAAP revenue of $700 million. That compares with Wall Street’s outlook for earnings of 9 cents a share on revenue of $797 million.

Activision reaffirmed its 2010 outlook. The company estimated earnings, excluding items, of 72 cents a share on non-GAAP revenue of $4.4 billion.

Shares of Santa Monica, California-based Activision closed 2.42 percent lower at $10.49 on Nasdaq, and rose to $10.80 in extended trading.

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