Activision sales top Street; Co hikes dividend, sets $1 billion buyback

(Reuters) - Videogame publisher Activision Blizzard Inc reported fourth-quarter revenue above analysts’ estimates, raised its dividend and announced a two-year $1 billion stock repurchase plan.

The company’s shares were up 9.5 percent at $43.50 in extended trading on Thursday.

Activision’s total adjusted revenue rose to $2.45 billion in the fourth quarter ended Dec. 31 from $2.12 billion a year earlier.

Analysts on average had expected revenue of $2.35 billion, according to Thomson Reuters I/B/E/S.

Revenue from the company’s high-margin digital business doubled to $1.45 billion.

The company’s net income rose to $254 million, or 33 cents per share, from $159 million, or 21 cents per share.

“The launch of Blizzard’s Overwatch created a major new franchise, while King’s mobile advertising tests are very promising as the basis for meaningful new revenue streams,” Activision Chief Executive Bobby Kotick said in a statement.

To tap into new streams of revenue, Activision has set up a film studio, e-sports and consumer products divisions, and bought “Candy Crush” maker King Digital for $5.9 billion, a deal that closed a year ago, to expand in the mobile gaming market.

In addition to the repurchase plan, Activision increased 2017’s cash dividend to 30 cents per share from 26 cents.

The fourth-quarter revenue beat came despite disappointing sales of “Call Of Duty: Infinite Warfare”, which launched in November.

Barclays, in December, slashed its estimate for sales from the “Call of Duty” franchise in the holiday quarter by 29 percent to $686 million.

Barclays said the shortfall was not entirely attributable to a fatigue with the popular franchise, but rather to a lower quality product from studio Infinity Ward.

Activision, which said it would take “Call of Duty” back to its roots with traditional combat in 2017, did not break out sales of “Infinite Warfare” in the fourth quarter.

The company also forecast full-year adjusted profit of $1.85 per share and adjusted revenue of $6.30 billion.

Analysts on average were expecting a profit of $2.03 per share and revenue of $6.70 billion.

Reporting by Anya George Tharakan in Bengaluru; Editing by Savio D’Souza