November 6, 2008

Guitar Hero Puts Up Big Numbers For Activision Blizzard

Two big video game companies reported quarterly earnings on Wednesday, with Activision Blizzard impressing investors while THQ didn't fare quite as well.

Activision Blizzard praised "Guitar Hero" and its many spin-offs for the company's quarterly success, as executives called the game one of the most successful entertainment products of all time, in any medium.

They reported that 24 million units had shipped worldwide and they expect to move more before the holidays. Executives, however, were cautious not to set the bar too high due to the slowing economy.

Activision Blizzard shares soared 11% to $12.14 in after-hours trading when third-quarter results were announced.

Competitor THQ, however, didn't perform as well. Its shares slid 16% to $5.49, well below their 52-week low in after-the-bell trading.

Despite share increase, Activision Blizzard still reported a $108 million loss for the period, because of charges related to the merger of Activision and Blizzard. The company earned 7 cents a share without those charges, while analysts expected 4 cents. Adjusted revenue was $717 million, crushing the company's guidance of $620 million. The company also affirmed its full-year guidance and authorized a $1 billion stock buyback.

THQ reported its fiscal second-quarter loss was $115.3 million, up from a $7 million loss a year ago. Net revenue fell from $229.3 million a year ago to $164.8 million.

Activision also celebrated strong sales of games based on the "Call of Duty," "World of Warcraft" and "Star Wars" franchises.

Executives also expressed enthusiasm for upcoming games based on such movies as "Transformers," "Madagascar: Escape 2 Africa" and "Monsters vs. Aliens."

THQ expressed enthusiasm for its "Saints Row" franchise as well as its new "de Blob" franchise.

The company also plans to focus on fewer, higher-quality titles and rein in its cost structure, and THQ lowered its fiscal 2009 financial guidance.


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