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Earnings Preview: Activision Blizzard

Wed, 05/05/2010 - 7:30am
The Associated Press

Activision Blizzard Inc., the video game publisher behind "World of Warcraft" and "Call of Duty," reports first-quarter results after the market closes Thursday.

WHAT TO WATCH FOR: Activision was able to weather the economic downturn better than most of its competitors, thanks to blockbuster games such as "Call of Duty: Modern Warfare 2." Investors will be focusing on how well this game is doing, along with "World of Warcraft." Downloadable "Map Packs" — extra content for "Call of Duty" that players can buy online — also are a good thing to watch because such downloads are becoming an increasingly important business for game makers.

Last month, Activision signed an exclusive 10-year deal with "Halo" maker Bungie, though it's not expected to provide many details on that transaction, or on its legal battle with ousted executives at Infinity Ward, the studio behind some of the most popular "Call of Duty" titles.

WHY IT MATTERS: Activision sells some of the world's best-known video games, which have become mainstream entertainment on par with movies and music. How well its games do can reflect sentiment across a broad range of consumers.

WHAT'S EXPECTED: Analysts, on average, are expecting a profit of 4 cents per share on revenue of $568.2 million, according to a poll by Thomson Reuters.

LAST YEAR'S QUARTER: Activision reported net income of $189 million, or 14 cents per share. Adjusted earnings were 8 cents per share.

The quarter's revenue totaled $981 million. Adjusted sales, which exclude changes in deferred revenue from online-enabled games and related costs, of $724 million easily surpassed analysts' $593.3 million estimate.

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