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Activision announces Guitar Hero 5, strong first-quarter earnings

May 7, 2009 |  2:42 pm
DJ Hero 
The controller for Actvision's upcoming DJ Hero game, due out this fall. Credit: Activision

Activision Blizzard is cranking up the volume on its music games business. The Santa Monica company said today that it would release three new games for its popular Guitar Hero franchise this fall, including Guitar Hero 5, DJ Hero and Band Hero.

The lineup shows how Activision expects to maintain momentum on its multibillion-dollar music-related games business: by segmenting the market to reach different types of music fans and players. Guitar Hero 5, with its indie and classic rock tunes, should appeal to the core audience of that franchise. Band Hero is targeted at the more casual player, with family-friendly Top 40 hits. And DJ Hero will have a turntable and feature dance, hip-hop and other genres of club music.

"Our Guitar Hero business up until now has been just classic rock," Activision Chief Executive Robert Kotick said in an interview. "We’re now broadening out the Guitar Hero fan base to every category of every listener and player."

The company is sitting in the catbird seat of the $50-billion global video game business. Its merger with Vivendi Games last year catapulted the company to the No. 1 spot, surpassing Electronic Arts, in terms of international revenue.

Actvision today also posted its first-quarter financial results. The company reported a profit of $189 million, or 14 cents a share, on sales of $981 million in the quarter ended March 31. Last year, before its merger with Vivendi on July 9, Actvision posted net income of $43 million, or 7 cents a share, on sales of $325 million.

Its shares, which rose 3 cents to $11 in regular trading, gained 25 cents, or 2.3%, after the earnings release.

But the company also issued a cautious outlook, tempered by a stormy economy. It forecast sales of $4.3 billion and earnings of 24 cents a share for the year. That's up just slightly over last year's revenue of $4.2 billion and earnings of 22 cents a share.

"It's a classic Activision report," said Colin Sebastian, analyst with Lazard Capital Markets. "They beat estimates for the quarter and they give a conservative outlook."

-- Alex Pham

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