Activision Blizzard Reports Q2 Profit, Beat Estimate; Cuts FY09 Revenue Outlook, Lifts Earnings View

8/5/2009 6:52 PM ET

(RTTNews) - Wednesday, video game publisher Activision Blizzard, Inc. (ATVI: News ), reported a better than expected second quarter profit, driven by Activision Publishing's Prototype, Transformers: Revenge of the Fallen, X-Men Origins: Wolverine and the Guitar Hero and Call of Duty franchises, as well as Blizzard Entertainment's World of Warcraft. Revising its forecast for the full year, Activision cut its revenue outlook, raised GAAP earnings outlook and reaffirmed adjusted earnings. For the third quarter, the Activision expects revenues and earnings to come in below Street estimates.

Santa Monica, California-based Activision Blizzard posted second quarter GAAP net income of $195 million or $0.15 per share, and non-GAAP net income of $112 million or $0.08 per share, both better than the company's prior GAAP and non-GAAP earnings outlook of $0.10 per share and $0.06 per share respectively.

Net income for the year ago quarter was $28 million or $0.05 per share, and non-GAAP net income was $81 million or $0.14 per share.

On average, 26 analysts polled by Thomson Reuters expected the company to earn $0.07 per share for the quarter. Analysts' estimates typically exclude special items.

Results for the quarter are not directly comparable with the year ago period, as the year earlier net income does not reflect the results of the combined company. On July 9, 2008, the business combination between Activision, Inc. and Vivendi Games, Inc. was consummated, and Activision, Inc. was renamed Activision Blizzard, Inc.

Activision Blizzard's GAAP net revenue for the quarter was $1,038 billion, and its non-GAAP net revenue was $801 million. The company's prior GAAP net revenue outlook for the quarter was $1 billion.

On a non-GAAP basis, the company's net revenue outlook was $775 million. Twenty-three Wall Street analysts expected revenues of $801.25 million for the quarter. In the prior-year quarter, the company reported revenues of $0.352 billion.

Robert Kotick, chief executive of Activision Blizzard, said, "Our second quarter overperformance was driven by Activision Publishing's PROTOTYPE, Transformers: Revenge of the Fallen, X-Men Origins: Wolverine and the Guitar Hero and Call of Duty franchises, as well as Blizzard Entertainment's World of Warcraft."

During the quarter, Activision Blizzard increased its North American and European market share 2.8 points across all platforms to 12.7% from 9.9% for the previous year. Product sales fetched $747 million for the quarter, while subscription, licensing and other revenues amounted to $291 million.