SAN FRANCISCO, (Reuters) – Video game publisher Activision Blizzard Inc forecast 2009 earnings to fall far short of Wall Street expectations as consumers trimmed spending and retailers avoided overstocking, sending its shares down 5 percent in extended trading on Wednesday.
That weak outlook overshadowed Activision’s better-than-expected quarterly earnings, driven by strong sales of its ‘Guitar Hero’ and ‘Call of Duty’ franchises.
But analysts including Wedbush Morgan’s Michael Pachter say Activision, which acquired ‘World of Warcraft’ developers Blizzard in 2008, was being overly cautious in its company outlook and in forecasting on Wednesday just mid-single digit growth in the addressable video game market.
Experts expect the video game industry to prove more resilient in the midst of recession as consumers ‘cocoon’ or choose less expensive ways to spend leisure time, but game publishers have nonetheless been hurt as retailers try not to overstock stores.
‘Overall it was just a more conservative approach, we think their core business is still performing great,’ Pacific Growth Equities analyst Leo Choi said.
This month, rival Electronic Arts Inc (nasdaq: ERTS – news – people ) posted weaker-than-expected results and forecast a loss for the current fiscal year, while THQ Inc (nasdaq: THQI – news – people ) swung to a loss and announced spending and job cuts. Take Two Interactive Software reports next week.
- Gabriel Madway
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